Yesterday’s Senate Banking hearings were less chiding and venomous than expected — but I still arrived at the finish line suitably toasted. Today, as DetroitÂ presents their case toÂ the House of Representatives Financial Services Committee at an even earlier hour, the goal is to stay out of my roommates’ liquor stash.
The rules have changed slightly:
- One sip of wine for each incorrect quality jab lobbed at the manufacturers.
- Two sips of wine for each unfair fuel economy jab lobbed at the manufacturers.
- Finish the glass if Congress mentions travel to the hearings via Hybrid rather than Jet. (Thanks Doug!)
- Two glasses if the phrase “We’re here because of GM” is uttered… or a forced GM-Chrysler merger is presented as a logical idea.
- One shot every time a Congressman hailing from a state that’s given billions in incentives to foreign manufacturers broadly opposes the loan.
- Shotgun a stolen Shiner Bock if: Daimler is blamed for Chrysler’s woes; Chrysler’s choice of hybrid is criticized; any CEO blames the UAW outright for its role in this crisis.
08:31 CDT: Here we go.
08:32 CDT: Rep Frank (D-MA) isÂ a major hardass: each Q&A session will be strictly limited to five minutes, or else. If we’re here past the five-hour mark anyway, I’ll finish the bottle outright. Frank’s opening statement acknowledged product mix changes, UAW concessions, and his belief that a bankruptcy (walking away from debt) would “greatly exacerbate the credit crisis.” Frank says loan consideration isn’t about concentrating on past mistakes. This isn’t an opportunity to “punish past mistakes, it’s to reduce the damage.”
08:43 CDT: Rep Kanjorski (R-PA) isn’t giving me much to work with. Fairly obvious testimony, vague admonishment but recognition of the severityÂ and immediacy of the situation. Yawn.Â Frank busts out the gavel; isn’t kidding about this five-minute thing.
Â 08:47 CDT: Rep Castle (R-DE) gives me a sense that the two previous Senate hearings primed the House and helped them look knowledgeable this morning…
08:50 CDT: Rep Waters (D-CA) wants to champion for America’s small car dealers and worries that D3 dealer reductions will hurt small car dealers. The dealer oversaturation lies in metro areas, however. In Ford and GM plans, the rural dealers are thought to be a backbone outright. Ford and GM live where Toyota doesn’t: Anytown, USA.
08:54 CDT: Rep Watt (D-NC) gets that this loan is a bridge loan to see next-generation alt-fuel technologies to fruition.
08:56 CDT: Rep Manzullo (R-IL) says the Belvedere plant produces “the world’s finest compact cars — Caliber, Patriot, and Compass.” Whoa. Says manufacturers’ plans are “woefully insufficient because they don’t address demand.” They do — they’re just possibly too optimistic, except for GM’s worst-case scenario contingency plea, which is more even more conservative than Doc Zandi’s 2010 sales volume estimate.
08:58 CDT: Rep Ackerman (D-NY) seems to think the American public takes their anger out on Congress because of Detroit’s situation; conveniently ignores that America hates Congress for a variety of reasons. Continues his hoary tirade, the gavel is pounded, he continues talking, Frank is serious about this gavel thing. Thank God I’m not drinking every time the gavel is pounded.
09:01 CDT: Chatter NickTT6 is drinking every time I say “Oh Snap.” (He’ll be blitzed in no time.) Rep Sheman (D-CA)Â finally has the guts to call out international manufacturers’ government support — and names countries outright, including Japan instead of railing on South Korea alone. Calls for a warranty fund so warranties will be honored in case the companies fail; wantsÂ an executiveÂ salary cap to be a provision in the bill as well. Says the end of private aircraft needs to be ensured by hardwriting it into the bill… well, Ford Air andÂ GMATS (and fifty-plus jobs) are already gone, so that would be nothing more than posturing. Finished the glass.
09:08 CDT: Rep Scott (D-TN) gets gaveled in the middle of talking about how the D3′s fuel efficiency isn’t up to par, so people won’t buy. Two sips.
09:11 CDT: Rep Brown-Waite is pranking me with a cheesy joke about the “Three Wise Guys” (jetsetting D3) have changed into the “Three Wise Men” (traveling by car.) Finished the glass.
09:14 CDT: “We were told if we arrived on a horse or in a battery-operated car, we would receive an extra minute.” Badum-ting! The Rep from Alabama. Name forthcoming.
09:16 CDT: Rep Barrett (R-SC) made me finish the glass with another reference to jets. Isn’t the jet fiasco over? Fifty people at GMATS alone lost their jobs because of one trite bad-PR move. It’s over now. Can’t we ask real questions instead?
09:18 CDT: Rep McCotter (R-MI): “I’m a Congressman, not a Conde Nast travel agent.” This guy’s pre-ThanksgivingÂ speech was probably the reason why I *didn’t* drink more lats week. McCotter steals the CT dealer association rep’s witty “tsunami” line from yesterday. “In America, the only thing too important to fail is a working family.” “Let us not fail these working families.”
09:22 CDT: Gettelfinger has finally perfected his “SRS BSNS” voice. More talk of unprecedented sacrifices… nothing new here.
09:35 CDT: Mulally, Nardelli, and WagonerÂ delivered the same prepackaged speeches they delivered to the Senate yesterday. Wagoner departed with an initial “thank you for being here during a time when you’re normally with your constituents.” Is “with your constituents” some kind of euphemism? Why does Congress deserve lauding for not being lazy and doing the work they’re paid to do?
09:42 CDT: Rep McCarthy (D-NY) demonstrates a shortsightedness that is all too common. She asks, “What will happen to dealers if one or all of you fail?” I say that the question is, “What will happen to American R&D and our capability as a nation?” McCarthy asks for a numerical figure instead of a rhetorical response. I say “National Sovereignty?” My roommate says, “$overeignty… with a dollar sign.”
09:50 CDT: It seems that Congress is unnaturally preoccupied with the possibility of Detroit coming back to ask for a second (likely), third (likely, too), fourth, or fifth round of loans, rather than the *definite* and *incredibly exorbitant* *inherent* cost to the government if the D3 fail. I don’t feel that the Congressional worry is sincere. I thinkÂ the “will you come back” question isÂ posturing. It’s sensitive, it tests well in the media, and it’s an easy point to needle on to appear
09:54 CDT: Rep Wilson (D-OH), paraphrased: “If a major supplier dies, is it possible for a manufacturer to die as a chain reaction?” Wagoner: “Yes.” “Is there securitization for the suppliers, then?”Â Wilson suggests that supplier provisions are placed into any assistance bill.
09:57 CDT: Rep King (R-NY), paraphrased: “The UAW found religion — and a sense of reality. Will you forget about this current crisis if things turn around?”Â After an aw-shucks ballpark analogy that puts the UAW’s concessionsÂ on “third base,” Gettelfinger: “We’re willing to go back to the bargaining table, as long as everybody else comes.”
09:59 CDT: Rep Klein (D-FL) suggests collaboration and research for powertrain and other technology. Klein proposes taking some of the loan funds to create a “think tank” so the companies can share technology. Here’s the deal: Ford’s hydrogen research (Ballard)Â isÂ the most advanced in the industry, GM’s series-hybrid progress hasÂ hit the road from Detroit to DC, and Chrysler’s only hybrid was off-sale after just 22 days on the market. Naturally, Nardelli says, “we totally subscribe to the concept!” Ya think? Wagoner goes along with the idea, but wants each companies’ R&D spending catalogued. Mulally says this “think tank” is already occurring because of the interdependence on suppliers, but isn’t unilaterally opposed to the idea.
10:04 CDT: Rep Bachus (R-AL) calls out the fact that Toyota and Volkswagen (and Morgan Stanley and Goldman Sachs)Â captive finance companies have special banking abilities,Â while Chrysler, GM, and Ford are still waiting on approval for theirs. Bachus says Stanley and Sachs were fast-tracked to ILC status, and that there is a double-standard preventing the D3 from getting their approval in a timely manner.
10:11 CDT: Rep Royce (R-CA) asks why D3′s international business is successful, and what about the American market makesÂ domestic business so tough.Â Wagoner: “Because we use our global capabilities, and we build up with the latest best practices” instead of learning and making mistakes while growing over 100 years. Cites pension and healthcare responsibilities. Mulally: “We focused on SUVs and trucks. Around the world, our vehicles are smaller. Going forward, with the work we’ve done with the UAW, we can now bring and leverage those fabulous vehicles from all around the world into the United States. I believe we’ll be able to profitably grow in the US with the knowledge gained from around the world.”
10:21 CDT: Rep Moore (D-WI) asks, “Why did you stop short from saying ‘nationalized healthcare would help our industry’?” Wagoner: We’ve been very active in the healthcare debates. Our endorsement wouldn’t necessarily have resulted in the enactment of a policy. Moore: “It’s very much not a part of your plan here. Let me move on.” Ouch. The D3 aren’t going to create socialized healthcare in one fell swoop… sorry, not gonna happen.
10:25 CDT: Manzullo says the “credit crunch” is a myth. The problem, he says, is a self-created subprime market in auto loans. He says the captive finance arms robbed small banks of the opportunity to finance. What about GM’s “Financing that Fits” program that has jettisoned GMAC financing in favor of local bank loans? Manzullo is indignant: “Your job is to make cars. Part of the bailout is to let you become a bank?” Says flatly he doesn’t want an answer because there isn’t one… and then lobs another completely off-topicÂ question. Er… give them a chance to answer. I’d sincerely like to hear D3′s reaction. Manzullo asks FordÂ if fastener & tool-n-die needs will be outsourced to China. Mulally gives the “Our goal is to expand our business and supplier base in the US “answer.Â Mulally answers Manzullo’s question flatly three times, and Manzullo becomes more and more indignant about outsourcing.Â Obnoxious.
10:33 CDT: Rep Bean (D-IL) acknowledges D3′s quality and fuel efficiency improvements, but wants to hear more about the marketing strategies to align perception with reality. Wagoner cites Internet and new media marketing. Wagoner says the Volt R&D has been more open, and more effective than classic advertising. Bean wants HQs to requireÂ cooperative (local dealer) marketing campaigns to stress fuel economy, because she doesn’t see as much talk about MPG in domestic manufacturers’ Sunday paper ads. Mulally and Nardelli agree with the suggestion. Bean closes by suggesting the D3 court the media better, because the stories aren’t being told fairly. Well, I’m trying.
10:36 CDT: Rep Hensarling (R-TX) induces more yawning and rolled eyes by asking the D3 to name three industries that aren’t hurting in this economy;Â cites charming porkyÂ small businesses in his home district that have failed. “If the purpose of Congress is to save jobs, why are we giving *you* the money?” I’m taking a drink. Dallas blows. Way to sell out your thousands of constituents at Arlington Truck, bro!
10:43 CDT: Rep Foster (D-IL) asks if D3 can become cost-competitive with transplants without resorting to outsourced sub-assemblies, which comprise 75% of the value of a new vehicle. Chrysler cites 78% of itsÂ materials areÂ sourced from a US-based supplier, but doesn’t have the actual percentage of how much of that content is Mexican. Foster then asks if battery tech is “this decade’s fuel-cell”, IE, is series-hybrid vaporware? Wagoner cites the Volt he drove to DC. Foster believes that vehicle sacrifices range, performance when compared to a gas-powered vehicle. Wagoner corrects him, butÂ does not fight that assertion as tough as I would have. I would have been like, “Hold my hoops.”
10:47 CDT: Rep Garrett (R-NJ) wonders if dealer cuts can be achieved without changing state franchise laws. Wagoner and Nardelli say those laws don’t need to be changed.
10:51 CDT:Â Rep Speier (D-CA)Â compares the 2020 MPG standards to Kennedy’s moonshot. She’s asked before if the D3Â can hit 2020 regs by 2015; their answer was no. She’s asking againÂ if the D3 still believe that they can’t reach the 2020 standards by 2015.Â Wagoner tries to answer, but Frank cuts the question short since it’s been asked before. (??? I wanted to hear the answer!)
10:55 CDT: Rep Brown-Waite is the latest in a long-line of porky Congresspeople whose dealership constituencies’ political pull is incredibly obvious in this questioning. Ironically, isn’t their influence a testament to the domestic manufacturers’ importance to national *and* local economies? I mean, if the D3 can’t pay their dealers, the dealers can’t pay for your pork. I guess it’s cyclical. No wonder so many fresh-faced youth leave DC disillusioned.
10:57 CDT: Rep Frank is reeeally expecting the D3 to pull for national healthcare once the Obama administration takes office. What do you think… would that forever brand the D3 as “the bad guy,” or would that be a smart move? Either way, this smacks of “we’ll scratch your back if you push ourÂ agenda.” Frank has had complaints from several states’ Attorneys General because the OEMs are suing the states over greenhouse emissions. These states say that Detroit shouldn’t get any money while they’re suing state governments.
11:01 CDT: Rep Barrett asks on behalf of his constituents, “Why now?” Gives a backhanded compliment to the D3, calling them “the bestest and the brightest… how did you not see this coming?” Bestest. I drink.
11:04 CDT:Â highmileage.org staple “CameraÂ Guy Phil” (who doesn’t really do any camerawork these days) asks, “Are you going to get used to drinking at 9Â in the morning?”
11:10 CDT: Rep Kanjorski (D-PA) asks flatly, why won’t Cerberus finance Chrysler? Isn’t it because they don’t believe your auto business isn’t viable? Nardelli says “I’ve never heard that.” Kanjorski asks, “Then why haven’t they financed you?” Invokes Corker’s business analysis from yesterday; both doubt that Chrysler will ever be able to retire its level of debt. Kanjorski says D3 CEOs make “twenty times” what successful Japanese auto CEOs make. Hyperbole aside… can we talk about Karoshi? I mean, if we’re gonna get real, let’s get real. The thing about Congress is that even those who want to help in this situation… aren’t equipped with the knowledge to speak with any authority. I think about all of the subjects Congress waxes philosophical about without any real substance… and I’m scared.
10:16 CDT: Rep Price (R-GA) asks why transplants’ taxes should fund the competing D3. Wagoner says they’re all seeking assistance from their own governments right now. Price says, “Oh, well, you understand what our constituents are asking us.” Who, Kia? One of the South Korean companies who sold a total of 750,000 vehicles in the US last year, while SK trade barriers contributed to our sales of only 6700 there? What kind of tax incentives did Kia receive to manufactureÂ its new SUVÂ in GA? How about theÂ GA-based suppliers to otherÂ OEMs in the south — like Nissan, Honda,Â Hyundai,Â Benz, and BMW?Â Did GM’s dealer taxes go towards those incentives? Let’s get real.
11:19 CDT: Rep Waters (D-CA) brings up small, community-based,Â family-owned dealers again. Dealer oversaturation is in metro areas, people! Megadealers in metro areas are the problem. The rural dealers — the “anchors in these communities” — are an asset. GM said that in their briefing Tuesday. Ford said that in their Senate proceedings yesterday.
11:27 CDT: Rep Maloney (D-NY) asks the D3 to pledge to stop all legal efforts to block CA emissions regs. Shows off her snazzy Starbucks cup. I take a swig of cab. She asks whyÂ the D3Â can’t meet other countries’ “much more fuel efficient cars.” Two sips. You are from Manhattan, you probably don’t own a car, NYC’s official vehicle is the Crown Victoria and any shift away from theÂ PantherÂ will come in the form of Ford hybrids or the Transit Connect. Wouldn’t you bother to at least read the EPA ratings of some competing vehicles if you knew you had to comment on the subject in front of America? Could she name a case in point? Mulally should have challenged NYC to convert their entire fleet to the BEVs she demands. Camera Guy Phil says, “Does she know how much more taxi rides would cost if cabs ran off hopes and dreams?” (We’re scheduled to end at about 11:45CDT, a little over three hours after starting.)
11:35 CDT: I raise my glass to Rep Capito (R-WV), who rattled off a list of names given to all her parents’ cars growing up: Big Blue, Goldie, and “The Chick Magnet,” an old Chrysler wagon. The D3 is lucky that they have cars like the Corvette, the Vista Cruiser, the Mustang, the Viper, the Wrangler, the Firebird, the GT40. If passion wasn’t a factor, the hopes of saving this industry would be dashed from the start.
11:40 CDT:Â Nardelli mentions approaching Denso,Â Toyota’s captiveÂ supplier, about battery technology. “They had the technology. They didn’t have the capacity.” Of course not! Just like the Aisin Transmission debacle at the launch of the Ford Escape Hybrid. Husbanding of technology is real. It’s time to deal with it. If anything good comes from this Congressional debacle,Â hopefullyÂ these dirtyÂ realities will come to life.Â
11:43 CDT: McCotter says two conversations are going on in Congress: 1) Should we give the D3 a bridge loan? 2) What will the bridge loan look like? 2a) Where does the money come from? “We are not talking about a new appropriation of new money. We are talking about redirecting already appropriated money.” “The money is already spent — it’s just going to be spent elsewhere.” The money will come from TARP funds (and will go to Wall Street if they don’t go to the D3) or DOE funds (which will also be spent if they don’t go to the D3.) McCotter proposes taking half of the funding from TARP, and half from DOE funds as a “Salomoinic” compromise. McCotter tells more than he asks: if the D3 go bankrupt, employees would not be able to pay for mortgages, and the quality of American life would decrease, making Paulson’s TARP irrelevant. He asks, “What happens to the domestic R&D already done if the D3 go bankrupt?” Wagoner: “The US would be throwing away a massive investment and a global leadership position.”
11:50 CDT: Frank has a major freakout at the conclusion of the first panel,Â and first asks panelists to leave quickly. Waits approximatelyÂ five seconds beforeÂ a grade-A shoutingÂ freakout, and nearlyÂ throws his gavel:Â ”Please leave.” Scolds Mulally for making any conversation at all at the desk… wow.Â He’s still asking for the doors to be closed… asking why people are still standing when there are chairs around. Wow.
11:54 CDT: Acting US Comptroller General Gene Dodaro prepares to present the business case for a loan to the Committee.
11:57 CDT:Â Edward Altman, NYU Finance Professor, cites his past clairvoyance:Â he downgraded Ford to “non-investment status” years ago, and urged GM to declare bankruptcy long ago.Â Altman is a big fan of Debtor-in-Possession loans, and thinksÂ bankruptcy is theÂ best option here. Have a look at Chrysler’s plan, and look at their DIP financingÂ costÂ estimates: they’re exorbitant even when compared to Zandi’s $50-125B total loan estimate. By the way: the Federal Government would have to provide thoseÂ billions, because as Zandi said yesterday, private banks would never give the D3 those DIP loans.Â
12:05 CDT:Â Felix Rohatyn, formerÂ ChairmanÂ of New York Municipal Assistance Corporation, is talking over my head. Only theÂ gavel rescued me from the story of his tenure at NYMAC, which was four days fromÂ bankruptcy before Gerald Ford stepped in. Oh. My. God.Â No more bean countersÂ near Detroit. EVER.
12:09 CDT:Â David Friedman, Union of ConcernedÂ Scientists Clean Vehicles Research Director and possessor of an incredibly indignant (or at least hyper) voice, suggests 1) acknowledging that the survival of Detroit depends on millions of alt-fuel/efficient vehicles; 2) requiring an ROI by requiring 2020 efficiency standardsÂ compliance by 2017, saving drivers $30B by 2025; 3) require that D3 drop lawsuits against 16 CA emission states, which represent 35% of taxpayers. Friedman is confident they can deliver the products, confident they deserve the help, but wants standards hardwritten into any loan bill.
12:15 CDT:Â National Association of Minority Automobile Dealers headÂ Damon LesterÂ relays his concern for small dealersÂ already suffering. Â Suggests employing the SmallÂ Business Administration loan guarantee programs to extend credit to small dealers to keep their sales up. Maybe I’m missing something. Are weaker rural dealers really more at risk of closure than the oversaturated volume dealers in metro areas? And if these small dealers are struggling — are they still contributing incredible amounts to the communities they serve?
12:24 CDT:Â Jeffrey Sachs, ColumbiaÂ University’s Earth Institute Director,Â calls this “absolutely the worst crisis since the Great Depression.” “In my view, Chapter 11 is… extraordinarily unpredictable.Â In my view, it is the last resort.” “Possibilities of cascading disasters that I think we would do bestÂ to avoid right now.”Â “I do not understand the reticence of the Fed right now.” This guy calls out Bernanke, calling him a missing personality in these discussions. He says the Fed lent against Stearns, and others, without question. Sachs views a direct loan from the Fed as a source as viable as TARP or DOE funding. “Absolutely as systemic as Citigroup.” “This is our largest industry. Are we going to watch it melt down before Christmastime?”Â ”Please, do not leave this weekend. I don’t want to wake up Monday morning and look at the market open when Congress failed to provide $25B when trillions are at stake.” Frank says Sachs is too free with Congress’s weekend time. Guess what? Solving emergencies is your job.
12:30 CDT: Altman can’t justify why the financial firms deserved to avoid bankruptcy, but the D3 does not. Frank flatly says AIG was restructured and their board was displaced without resorting to bankruptcy. Altman has no return. Why do you invite a crony to be a witness in a Congressional panel?
12:35 CDT:Â Friedman estimates chances of GM and Ford standing autonomouslyÂ at 90%. Chrysler… not so much.Â Also predicts that if the D3 drop their lawsuits, other suing manufacturers and suppliers will drop their suits as well.
12:37 CDT: Friedman cites lower MPG — not perceived lower MPG — as one of the reasons behind the D3′s lagging sales. Two sips.
12:39 CDT:Â Rep Biggert (R-IL) asks: willÂ drawing funds from theÂ ESA (DOE 136)Â to fund a loanÂ ”rob Peter to pay Paul” and thus result in lagging MPG tech? Friedman says that could be a concern.
12:47 CDT:Â Sachs is really pushing for action over the weekend. Can Congress work together to fund a loan to hold the D3 over until 31 March? What do you think? Are youÂ optimistic?Â
12:53 CDT:Â Waters is again relaying her worry that small dealers will be the most at-risk if restructuring commences. (If restructuring *doesn’t* commence, there won’t be *any dealers* left at all.) Waters isÂ at a loss as to whyÂ small dealers can’t get access to credit.Â By now, it’s clear that there was a major PR failure on behalf of the D3. They have not relayed theirÂ POVÂ of the automotive credit climate. I keep referring to GM’s “Financing that Fits” program that would theoretically help small dealers and small banks –Â I could definitely be wrong, so let me know what you think in the comments. Â In any case, GM, Ford, and Chrysler need to work on an education campaign for the media (or the public, or Congress) that distills why the credit climate is frozen.
13:01 CDT: Rep Bachus is disappointed with the banks that were loaned billions with the understanding that the money would be loaned to manufacturers. The question that hangs in the air as Bachus and Altman go at it: Okay… well… is AIG going to provide the hundreds of billions in DIP financing that the D3 are going to need? And is nobody thinking about the creditors that would be screwed if the D3 defaulted on smaller “unimportant” loans?
13:10 CDT: Rep Lynch (D-MA) blasts the D3′s salesÂ projections as “unrealistic considering today’s unemployment numbers.” GM’s worst-case scenario’s projections were more conservative than evenÂ Zandi’s bleak estimates — are they still too optimistic? (Not a sarcastic question.) You can blast Ford forÂ optimism in auto sales figures — but GM did the legwork and prepared their case for the worst. If auto sales dip below 9m units, as a country, we are done.Â
13:13 CDT: RepÂ Lynch asks if it would be unconstitutional to pass a law to give new debt (the government loan)Â precedence over longer-standing debt. Altman pauses, then says, “That would undermine the entire credit system.” After AIG, after Lehman, after Citi, after Stearns… are you kidding, Altman? Are you joking, sir? Lynch calls him on it — “The credit system is already pretty undermined.” Uh, YEAH.
13:16 CDT: Rep Green (D-TX) asks the panel if they believe theÂ AIG bailoutÂ was in America’s national interest. Hands go up partially, go down, shake, waiver, heads cock quizzically. OHHH SNAP. (Nick drinks.) Green asks if “the decision of indecision will impact America’s interests.” All hands shoot up more confidently. Leave it to Houston’s freeway culture to inspire Green to understand the importance of the automakers’ viability to the national interest. Green invokes Martin Luther King Jr, saying that now is the time for bold and decisive action. I take a drink. I also love Houston, and UH for that matter. Eat your heart out, Jalopnik.
13:20 CDT: “We are about to bankrupt the American dollar. We are playing with fire.” Green. Wow.
13:22 CDT: Rep Cleaver (D-MO) thanks “Bishop Al Green” for “his sermon.” Cleaver is from KCMO, which has the Saturn Aura plant and a Ford truck/SUV plant.
13:25 CDT:Â Altman isÂ suddenlyÂ hung up on whether the D3 will be coming back for more. Even if they come back for $125B, it’ll pale in comparison to the cash given to the debtsellers that Altman serves. Wall Street knowledge and banking economy versus Main Street physical production and export economy… then again, I could be shortsighted.
13:32 CDT: Rep Perlmutter (D-CO) tangles with Altman about passing new legislation to allow new debt precedence over old debt. Altman wants to keep Chapter 11 as the sole harbor where that can happen. “It would be changing the whole capitalistic system.” Perlmutter is insistent that taxpayers deserve debt seniority as protection in an emergency loan. It seems that some kind of loan billÂ withÂ debt seniority provisionsÂ thatÂ would otherwise beÂ ”extralegal” is what Congress wants — and what Wall Street would be ticked by.
13:37 CDT: I remember a more innocent time in journalism when I wrote about faulty trunk release buttons.
13:40 CDT:Â Sachs again calls out Bernanke to “step up,” verbatim. Awesome. Why isn’t the Fed involved?Â What are we payingÂ them to manage? Manzullo keeps bantering about the “woefully insufficient” plans of the D3, andÂ seemsÂ uninterested inÂ offering assistance at this point.Â Sachs tells Manzullo what’s up: “You’re not going to succeed in your objective, sir.”Â Â
13:45 CDT:Â Foster wants to know what assetsÂ the D3 haveÂ as collateral for DIP financing. Do youÂ seriously think Chrysler has $125B in collateralÂ for DIP financing? Do you think GM has it?Â
13:49 CDT:Â We’re out of wine. Thank God.Â No more. Please!Â
13:50 CDT:Â Foster calls for a “National Auto Policy:” tariffs, Non-Tariff Barriers, and other measures to ensure a continued domestic manufacturing industry. Did he just set a precedent forÂ nationalistic sentiment… perhaps even protectionism?Â Speier says, “The American people are damn mad… they don’t want us to bail out this industry.” Sachs retorts: projects potential unemployment rateÂ jumpÂ to 9-12%. “The fury will be nothing like when they hear about a $25B bailout.” “This is crucial to stop this. The American people need to understand: this isn’t a favor for the industry, this is a favor for the American people. This is to brake a collapse of the economy.” Does not pull punches. Not bad.
13:55 CDT:Â Frank: “If we are lucky, we will comeÂ up with a bill next week that nobody will like.” That means no special interest has been favored. “Averting disaster is no basis for a political campaign.” “There is one very important metric in economics: reducing the rate at which something bad is happening. That can be a sign ofÂ success in a public policy term.” He tells jokes… butÂ will he have a diva freakout and kick everyone out while screaming and yelling again? Six hours later: hearing adjourned.
13:57 CDT: Chatters have final thoughts. Nick: “GM and Ford are in a lot better shape than Chrysler.” JStutler: “I think, overall, things are looking about 68% positive for this deal happening.”Â Santiago: “I hope there’ll be a downloadable version of this later so I can really watch it.” Well, there you have it. Liveblogged for posterity. Thanks for watching with us — and for sharing your thoughts.