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Fallout: The Financial Crisis

No clear road yet for carmakers’ bailout

Nancy Marshall-Genzer Dec 4, 2008
Fallout: The Financial Crisis

No clear road yet for carmakers’ bailout

Nancy Marshall-Genzer Dec 4, 2008


Kai Ryssdal: It was a more humble collection of auto industry CEOs that came calling on Congress this morning. Last time of course they were sent home with stern warnings to come back better prepared.

Today they did.

But the jury’s still out on whether it’s going to get them the money they need.

From Washington, Marketplace’s Nancy Marshall Genzer reports.

Nancy Marshall Genzer: Talk about inflation. Two weeks ago the automakers asked Congress for $25 billion. Today they told the Senate Banking Committee they needed $34 billion. Republican Richard Shelby of Alabama complained about the high price tag. And he said the automakers’ restructuring plans were too vague.

Richard Shelby: If you made this presentation to get a bank loan, I suspect that any sensible banker would summarily dismiss your request.

But much of the Senate hearing focused on how to get money to the automakers, not whether they deserved it. Should the Fed step in? New York Democrat Charles Schumer suggested creating an auto czar to oversee any federal funding. Schumer asked GM CEO Rick Wagoner what he thought of that.

Charles Schumer: Would you agree with this kind of model?

Rick Wagoner: Um, it would be very helpful for us to have someone to work with on this.

Helpful? To have a czar peering over your shoulder? Yes, Wagoner said, bring it on.

Chrysler CEO Bob Nardelli and Ford CEO Alan Mulally chimed in — a czar would be fine with them too. They also agreed to an oversight board.

Morningstar auto analyst Dave Whiston says the CEOs may have to agree to more oversight, but it could complicate things.

Dave Whiston: You have to trust the management of the companies and loan them the money and let them be the experts that they are in running an auto company and not force them to go through an extra layer of oversight.

But Congress has its own overseers — the voters. In a recent CNN poll, 61 percent of those surveyed opposed bailing out the automakers.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

Ryssdal: There’s an interesting side note to the hearings today. Banking Committe Chairman Chris Dodd had apparently wanted some familiar faces at the witness table. But both Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson had prior engagements, which didn’t sit too well with Senator Dodd.

CHRISTOPHER DODD: The Secretary of the Treasury is in China right now. It’s time to come home. We’ve got a serious problem on our hands. And I reallize he’s got a meeting over there, but we need him here. And I need the Federal Reserve to step up as well.

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