Auto Bailout Senate Hearing Wrap-Up

After sitting through nearly six hours of Senate hearings today about bailing out the Detroit 3, it’s time to reflect and recap. All of these items are in loose terms, and in no way can we go into the depth of all six hours. You can do that yourself tonight on C-SPAN, when it re-airs them. If you want to skip all that, though, read below.  Here’s what we gleaned from the talks:

• The Government Accountability Office seems OK with bailing out the auto industry.
• Sen. Chris Dodd, D-Conn., displayed a chart of how much money was given free and clear to banking institutions in the recent $700 billion bailout package, versus the much smaller amounts sought by the Detroit automakers.
• The co-founder of Moody’s Investors Service, a credit and risk analysis group, says the total bailout could cost closer to $75 billion-$125 billion, versus the $34 billion being requested.
• He also said bankruptcy or inaction would be catastrophic to the economy in its current state. The total cost to the economy if the automakers fail would be close to $1 trillion, he said.
• Both GM and Chrysler said they needed money immediately, as in before Dec. 31, to survive.
• All parties, including the CEOs of Ford, GM and Chrysler, the head of the UAW, and representatives of dealers and suppliers agreed to some form of oversight from the government if bailout money were supplied.
• There was talk and consensus that an oversight board might not be able to act as quickly as a single person or trio of people would, which might be another possibility — a car bailout czar, so to speak.
• Sen. Bob Corker, R-Tenn., and Sen. Bob Bennett, R-Utah, suggested forcing a merger between GM and Chrysler to save costs of nearly $8 billion a year.
• Corker also forced GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli to publicly discuss their failed merger talks on the record. Both said it only failed because of a lack of available money, due to the credit crisis. Bennett suggested that a government-funded loan could be the money they need to pull off a merger. Wagoner almost enthusiastically agreed to that possibility, and Nardelli did as well, saying he’d give up his job to save Chrysler. A merger would likely negate the need for Chrysler’s suite of executives.
• Corker relentlessly berated Nardelli about his company’s position and private ownership and asked, if Cerberus wouldn’t reinvest in Chrysler with its capital, why should the government? This was the closest the hearings came to addressing the companies as separate entities instead of one united group.
• Dodd said after the hearings that he believes something can be done, and most sides agree some kind of action must be taken. You can expect weekend meetings, with some word coming perhaps as soon as Monday.
• Dodd also stated forcefully, from his opening statements to his post-hearing interview, that the Bush administration, the Treasury Department or the Federal Reserve could act now using previously approved bailout funds (the TARP bailout money)  to save the U.S. auto industry without waiting for new legislation to be drafted and voted on in both houses of Congress.