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19 November 2008

Auto Exec Criticized by House Committee

In a grueling day of testifying before Barney Franks' House Financial Services Committee, auto company executives endured a barrage of questions and criticisms regarding their request for another $25 billion to bailout the auto industry.

GM's Rick Wagoner said a failure of the auto industry would be catastrophic to the American economy. Auto CEO's stated that the failure of one of the Big 3 would have dire consequences to the others.

Congressional leaders tried to understand why giving the automakers another $25 billion would help solve their problems and how long the money would last. The CEO's would not give a straight answer as to how long the money would keep them afloat, but GM's Wagoner said they estimated GM could survive through next year with current funding.

Automakers were pressed for plans to curtail expenses and if they had contingency plans for bankruptcy. One lawmaker asked if the executives travelled to Washington in their private jets or if they flew commercially. They all indicated that they used company planes.

Although many lawmakers indicated the money would likely be forthcoming, they weren't happy about it and probably not going to vote for the proposed bailout plan. Congressional leaders are worried about who will come to congress next asking for a handout and aren't convinced that giving the automakers another $25 billion will stop the bleeding. How long will it be before they are back asking for more?

One house member raised the point that they could give 2 million small businesses $25 billion and possibly have a more positive effect on the economy than giving it to the auto companies.

Senator Bunning says he would prefer to give the auto companies money to assist them through their chapter 11 bankruptcy, hoping that a new and more efficient company emerges.

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