Blue Spot

Senator rips auto industry at bailout hearing - Nov. 18, 2008

NEW YORK (CNNMoney.com) -- The case for a bailout of U.S. automakers came under sharp scrutiny on Tuesday at a congressional hearing that portrayed the Big Three as both short-sighted in their business strategies and central to the economy.

"Their board rooms in my view have been devoid of vision," said Sen. Christopher Dodd, D-Conn. "They have promoted and often driven the demand of inefficient, gas guzzling vehicles, and dismissed the threat of global warming."

Dodd, chairman of the Senate Banking Committee, spoke as Congress kicked off the first of two days of hearings over whether the government should extend a lifeline to the nation's troubled automakers.

The head of the powerful United Auto Workers union, testifying side by side with the industry's top CEOs, said the failure of one automaker would shatter consumer confidence in the other two.

"If one of these companies goes into bankruptcy, I'd be willing to bet it takes two, or possibly all three, with them," said Ron Gettelfinger , president of the autoworkers' union, said during questioning.

The industry, already struggling because of high labor costs and weak sales, is being stung as car buying grinds to a halt amid credit difficulties, job losses and fears of a recession. The industry has been lobbying hard for a $25 billion loan from the $700 billion bailout slated for the finance sector.

One Republican lawmaker, Sen. Michael Enzi of Wyoming, said he was uncertain a bailout would work.

"We have little evidence this $25 billion will do anything to promote long-term success," Enzi said.

But the industry and its advocates, as well as many experts, say that without federal help, General Motors (GM, Fortune 500) will likely go bankrupt within months, and that Ford (F, Fortune 500) and Chrysler LLC could soon follow.

Labels: Auto industry, Government Bailout, Unions

Emanuel Urges Aid for Auto Industry - NYTimes.com

In his first televised interviews since being named the chief of staff for President-elect Barack Obama, Rahm Emanuel on Sunday called for swifter action to lift the struggling auto industry and suggested Mr. Obama and President Bush might clash over a stimulus package.

On the first weekend since Mr. Obama was elected president, several of his aides said his administration would attempt to roll back a number of Bush administration policies, including tight restrictions on stem cell research and a push for oil and gas drilling in Utah. The statements indicated that the first few months of an Obama administration could bring about stark reversals on controversial policies.

But Mr. Obama’s aides emphasized that his first priority would be finding ways to repair the battered economy, whose latest woes include a steep drop-off in retail sales and the loss of millions of jobs. The auto industry has been particularly hard hit, with Ford and General Motors pleading for government help after car sales plummeted 18 percent this quarter. General Motors, the country’s largest carmaker, reported a $4.2 billion third-quarter operating loss, and said it may be on the brink of collapse.

Over the weekend, the Speaker of the House, Nancy Pelosi, and the Senate Majority leader, Harry Reid, sent a letter to the Bush administration requesting that funds from the $700 billion bailout package — intended for Wall Street — be used to help carmakers as well. But the White House has signaled that it would oppose such a measure.

When asked on ABC’s “This Week” where Mr. Obama stood on the issue, Mr. Emanuel seemed to suggest that Mr. Obama, as a last resort, might be open to tapping the rescue fund to help carmakers, calling the auto industry an “essential part of our industrial base.”

Labels: Auto industry, Economy, Financial, Government Bailout, Rahm Emanuel