U.S. Senator Bob Corker (R-TN), a member of the Senate Banking, Housing, and Urban Affairs Committee, today outlined a plan that should be adopted before any loan to the U.S. auto industry is discussed or contemplated. The hearing, the second in a series examining the industry, included testimony from UAW (United Automobile Workers union) President Ron Gettelfinger, Ford Motor Company President and CEO Alan Mulally, Chrysler Chairman and CEO Bob Nardelli, and General Motors Chairman and CEO Rick Wagoner.
• “One, give existing bondholders 30 cents on the dollar to help reduce their overall debt load.
• “Two, bring wages immediately in-line with companies like Nissan and Volkswagen.
• “Three, GM owes $23 billion to the United Auto Worker’s VEBA (voluntary employees’ beneficiary association) account. The union must agree to take half of that payment in GM stock.
• “Four, the union must agree to do away with payments to workers who are still receiving almost full compensation up to four years after their jobs have ended.
“These are the same types of conditions a bankruptcy judge might require to ensure that these companies become viable and sustainable into the future, and if they will agree to these terms then we have something to talk about. The process I have suggested would allow them to avoid the problems and stigma that accompany a formal bankruptcy, while forcing them to do the things they need to do to be successful companies.”
Okay, one Senator was on the ball at the Big Three hearing: “Senator Corker says G.M. can’t survive with its current capital structure, and complains that G.M. is not seeking a big enough haircut from bondholders. He also says the U.A.W. concessions did not amount to much. In a bankruptcy, he says, the obligations to the post-retirement beneift fund known as VEBA ‘are toast.’ He demands promises of big concessions from the U.A.W., and does not get them. Instead, he hears about a poor old lady who needs her pension.” (Others liked what Corker had to say as well.)
And is Sen. Corker the only to notice that “Chrysler” is really owned by a private equity fund, Cerberus? You remember them? The same gang that stripped Mervyn’s retail chain store bare and left the employees without so much as their accrued vacation pay. These are the people Democrats want to give money to?
And in case you still weren’t convinced the car bailout is a bad idea: “All three automakers promised that they would not be back in front of Congress next year if they got the funds — assuming the economy doesn’t go completely down the tubes in the next few months. Moody’s Economy.com chief economist, Mark Zandi, questioned that prediction. He said the $34 billion wouldn’t be nearly enough and put the total price tag at between $75 billion to $125 billion.”
I like what Alabama Senator Richard Shelby said last week on Morning Joe. He was responding to Michigan Senator Debbie Stabenow's comment that we can't just walk away from the problems in Detroit. Shelby replied "We better always walk away from failure".