Dear Ted:
You have contacted me in the past regarding the auto bailout for the big three automakers, and I thank you for sharing your views regarding our nation’s economic recession and the fiscal challenges facing America’s domestic automobile manufacturers. As you are aware, our country’s financial crisis has affected every sector of our economy and every segment of the population – from Wall Street to Main Street, and from “Motown,” Michigan, to “Our Town,” Nebraska.
Millions of jobs are tied, directly or indirectly, to the auto industry; Nebraska is no exception. In fact, reports have shown that the auto industry impacts at least 13,600 Nebraska jobs and pays more than $267 million in wages to those employees. Many of these jobs belong to individuals working on the floor of a manufacturing plant making automotive parts or at a car dealership which has been a part of a community for years. Some are even third-generation-owned automobile dealerships in rural Nebraska communities, employing significant percentages of their local populations and are literally the only service station around for farm vehicles.
Because I know how important this issue is to you, I wanted to update you on the assistance that was provided by the federal government to General Motors Corporation (GM) and Chrysler Motors, LLC (Chrysler).
On December 11, 2008, the Senate failed to achieve the 60 votes necessary to invoke cloture, a procedure which would have allowed for an up-or-down vote following a period of debate, on the Auto Industry Financing and Restructuring Act, H.R. 7005. This proposed legislation would have provided a bridge loan to the U.S. auto industry in order to help automakers sustain viability and modernize their manufacturing floors to build more flex-fuel vehicles. The bill also included built-in taxpayer protections to prevent industry executives from using any government-provided assistance for bonuses and golden parachutes, a condition for which I strongly advocated, while giving the President the authority to select a designee to oversee the auto industry’s transformation. Together with 51 of my fellow Senators, I supported cloture on H.R. 7005 simply because I believe legislation should be allowed to move forward. However, the 60-vote threshold was not met; and the legislation was unable to be brought to a full vote on the Senate floor.
On December 19, the Bush Administration and the U.S. Department of the Treasury agreed to extend loans to GM and Chrysler from the Troubled Assets Relief Program (TARP), which did not require separate Congressional approval. These loans were intended to help GM and Chrysler become financially sustainable. They came with strict conditions and strong government oversight limits on executive compensation and required the elimination of financial “perks,” such as the use of corporate jets. These companies were then to show financial stability by March 31, 2009.
Since the Obama Administration has come into office and taken on this critical issue, many developments have taken place. On March 30, after seeking advisement from his Automotive Task Force, President Obama deemed the GM and Chrysler plans unable of putting forth the necessary changes needed to be viable. The President then gave Chrysler 30 days and GM 60 days to come forward with a more aggressive restructuring plan.
At Chrysler and GM’s respective deadlines, both companies filed for Chapter 11 bankruptcy. To preserve American jobs, as part of both companies’ bankruptcy filings, the U.S. government offered additional financial assistance from TARP as these restructuring companies re-tooled operations in an attempt to once again reach viability. Since that time, both Chrysler and GM have emerged from their bankruptcy proceedings and formed new companies. Chrysler merged with Italian automaker Fiat and has become “Chrysler Group LLC,” and the new GM has become “General Motors Company.”
There certainly was a whole lot not to like about the failure of these two domestic auto companies. Nevertheless, the choices made since last September were the lesser of two evils because in this case, doing nothing was not an option. Too many Nebraska jobs and communities have a stake in the auto industry. Yet, I remained deeply concerned about the investment of taxpayer dollars in these private companies.
In order to address these concerns and clearly state the federal government’s role moving forward, I introduced a resolution (S.Res. 175) expressing the “sense of the Senate” that the United States is only a temporary shareholder in the American automotive industry. The resolution is very clear: taxpayers should be protected, and the government should divest its ownership in these companies as expeditiously as possible. The resolution also calls on the Comptroller General of the United States, the Financial Stability Oversight Board, and the Special Inspector General for TARP to closely monitor GM and Chrysler’s progress toward returning to solvency in order for the federal government to fully complete its divestiture.
I have continued to work with my colleagues on both sides of the aisle to secure the resolution’s passage so that the Senate is on record that the federal government has no interest in maintaining ownership in the auto industry and the investment in these companies is returned to the American taxpayer as soon as possible.
Regardless of the GM and Chrysler companies’ progress toward sustainability, Congress must review what actions produced our nation’s fiscal crisis. I am committed to working for comprehensive reform of America’s financial system and to achieving long-term solutions to our nation’s current economic challenges. As we move forward in the 111th Congress and look to these goals, it is my hope that bipartisanship and civility will prevail. I appreciate your interest in this issue.
Sincerely,
Ben Nelson
U.S. Senator
