Obama Defends Auto-Bailout During Detroit Stop

By Sarah Mamula - Talk Radio News Service

President Barack Obama defended his administration’s decision to provide federal aid for the auto-industry during an address Friday morning at a Chrysler assembly plant in Detroit.

“In the 12 months before I took office, the American auto industry…looked like it was going over a cliff,” said Obama. “Chrysler and GM were on the brink of liquidation.”

He recalled the criticism he received in Washington last year for his decision to provide federal funding. Obama said that if the government had not bailed out Chrysler and GM, an estimated 1 million jobs would have been lost in the middle of the recession. 

Furthermore, Obama said that the industry is recovering, creating more jobs, and adding more shifts at assembly plants to meet the demand. He emphasized to the crowd of auto workers that the nearby Sterling Heights Chrysler plant, which was scheduled to close in 2012, will stay open. He was met with loud applause.

“Today, for the first time since 2004, all three U.S. automakers [GM, Chrysler, and Ford] are operating at a profit,” said Obama. “You are proving the naysayers wrong.”

The President wanted the audience to remember those who were against government intervention in the auto industry.

“If some folks [Republicans] had their way, none of this would be happening,” said Obama. “This plant and your jobs might not exist.”

Obama is also scheduled to visit the Ford plant August 5th.

When Will The Government Get Out Of The Auto Industry And How Soon?

By Courtney Ann Jackson-Talk Radio News Serive

The U.S. federal government is working to construct an orderly exit from its involvement with the automobile industry, while stabilizing the auto giants and saving jobs, said Ron Bloom, a senior advisor at the U.S. Treasury Department.

Bloom testified today before the Senate Banking Committee, along with Dr. Edward Montgomery, White House Director of Recovery for Auto Communities and Workers.
 
Committee Chairman, U.S. Sen. Chris Dodd (D-Conn.) explained that the hearing was unique. He said it was the first time it would have the opportunity to hear directly from Obama administration officials in charge of supervising federal assistance to the auto industry. 

“Let us remember-Not too long ago, it seems an American could walk a city block without sensing the strength of an American automaker’s brand. Their labels adorned buses, railcars, and aircraft. They dominated the U.S. automobile market,” said Dodd. “Today, those images have faded. For the first time, the domestic market share for Ford, Chrysler and GM has slipped below 50 percent, going form 66 percent in 2001 to just 47 percent today.”

Bloom explained to the committee that the restructuring process that followed both GM and Chrysler filing for bankruptcy has required “deep and painful sacrifices from all stakeholders,” including workers, suppliers, dealers and the communities that rely on the auto industry. 

The Obama administration made it clear in February that it’s auto task force wanted to handle the auto restructuring process in a commercial manner. That is to ensure that all stakeholders are treated fairly and that the government’s involvement doesn’t change how much they receive, according to Bloom.

Earlier today, House Majority Leader Steny Hoyer (D-Md.) and U.S. Rep. Christopher Van Hollen (D-Md.) held a press conference with colleagues and automobile dealers.

Hoyer said, “Two Sunday’s ago I was on a phone call with the White House who was helping us make our policy effective and I asked them, what money does it save the manufacturing General Motors or Chrysler if you shut down a dealership? Answer...zero.”

U.S. Rep. Frank Kratovil (D-Md.) was also present for the press conference and said the way things are being handled could be viewed as a “bailout for the big guys but a force out for the little guys.”

Speaker Pelosi: "No more just here's the money, sit on it so that your capitalization is improved."

by Christina Lovato, University of New Mexico-Talk Radio News Service


Today in Speaker Nancy Pelosi’s weekly press conference the economy was still a big issue. Pelosi started off the conference by speaking about the deterioration of the economy and how President Obama is putting forth initiatives in just the four weeks he has been in office. “Yesterday the President put forth the details and guidelines for a housing initiative that he announced earlier. Under it 79 million of Americans over the next couple of years will be able to modify their loans, they will have the opportunity to modify or re-finance their homes, stay in their homes. Today Congress will pass legislation on housing and bankruptcy which will help some more.” she said.

Pelosi addressed the housing, regulatory reform recovery package, stating that she is very positive about it. “A package that cuts taxes for the middle class, 95% of the American people. A package that will create or save 3-4 million jobs over the next few years and a package that strives to bring stability to our economy.” she said. 

Today, President Obama is holding a health care summit and Pelosi said that healthcare costs are the biggest problem of the American people. “It’s about a healthier America, it’s about recognizing that health care reform is regulatory reform and it recognizes that health care is an economic issue.” 

The Speaker also said that she agreed with President Obama stating that we need to have fewer earmarks. “This whole thing about the Republican side about earmarks is so disingenuous...The idea is lower number, more transparency, total accountability.” she said. 

When it came down to talking about money, Pelosi said that distribution of the TARP funds must fulfill the purpose of why the money is given to them. “No more just here’s the money, sit on it so that your capitalization is improved.” When it came down to talk about the auto industry Pelosi concluded by saying, “Any money that we give to the auto industry must be considered a lifeline, not life support. This all has to be about viability of the auto industry to survive.”

Bailouts vs. Bankruptcy - how to help the auto industry

By Michael Ruhl, University of New Mexico - Talk Radio News Service

Today the Heritage Foundation held a forum concerning the best methods for dealing with the auto industry, specifically focusing on the benefits of bankruptcy. Paul Ingrassia, former Detroit Bureau Chief of the Wall Street Journal and Pulitzer Prize winner, said that Chapter 11 Bankruptcy may be of long term benefit to companies like GM and Chrysler. According to Ingrassia and fellow panelist Douglas Foley, of McGuireWoods LLP, bankruptcy could free the companies from contractual obligations which are otherwise overly burdensome to their operations. It would allow these companies to reduce the number of brands and dealers they have without lengthy legal gridlock, which in turn could provide the ability for the auto companies getting back on their feet through a very thoughtful reorganization.

Andrew Grossman, Senior Legal Policy Analyst at the Heritage Foundation, said that there are many risks with further government involvement in assisting the flailing auto industry. The first risk he highlighted was economic, more specifically the risk that with a government safety net, companies will be less responsible and self-regulating. Grossman also addressed the financial risk assumed by the taxpayers in the course of government intervention, because it is money which will possibly not be paid back to the government. Additionally, Grossman addressed the risk of politicizing the operations of these companies if the government were to gain an ownership stake. Grossman felt that if routine operations within these companies were politicized, they would be subject to political chess games and lobbying, hurting the way that business could operate within the free market. Grossman insisted that the proper solution to the problems faced is to stop all government bailouts and to insist on bankruptcy.

More money, more money -- Automakers ask Senate for $34 billion

The CEOs from the big three automakers testified before the Senate Banking, Housing and Urban Affairs Committee to discuss their $34 billion bridge loan appeals to prevent their companies from failing.

“Ford is an American company and an American icon....The entire Ford team...is absolutely committed to implementing our new business model and becoming a clean, profitable company that builds the best cars and trucks on the road for our customers,” said Allan Mulally, President and CEO of Ford Motor Company. All three CEOs discusses their plans to implement new business models, cut costs and build better, more fuel-efficient vehicles in the future.

Dr. Mark Zandi, chief economist and cofounder of Moody’s Economy.com discussed how research suggests that if an automaker files bankruptcy, it would cause a loss in consumer confidence and decrease in sales. “I recommend that Congress provides the $34 billion in aid that the three requested...this is necessary given the potential for automakers imminent, disorderly bankruptcy at an extraordinarily fragile time for the economy,” said Zandi. He also estimated that the $34 billion would not be enough money to stabilize the domestic auto industry. The big three “would ultimately need, in my view, somewhere between $75 billion and $125 billion” to avoid bankruptcy, said Zandi.