The CEOs of the Detroit Three have successfully navigated the roads between Michigan and Washington, D.C., in their hybrid vehicles, and arrived at the hearing room in the Dirksen Senate Office Building. UAW chief Ron Gettelfinger is there too, but I’m assuming he was sensible enough to fly Northwest. It’s their second try at pleading their case before Congress, and this time they have plans.
Anyway, I’m not gonna really liveblog the hearing, because the guy on CSPAN says it may last five hours and life’s just too short for that. (Although, in a great victory for mankind, Committee Chairman Chris Dodd has just announced that only he and his Republican counterpart Dick Shelby will make opening statements–unlike last time, when every last member of the committee got his or her two cents in and that part of the hearing alone took more than an hour.) I do have the luxury of working in a place where I can sit at my desk with the TV on, though, so I’ll keep it on in the background and will occasionally update this post with the goings on. Plus, Jay Newton-Small will report in with some exciting and amusing on-the-scene observations. In fact, she just did:
Walking to the hearing I came across the GM fuel cell car idling near Dirksen with a chauffeured Cadillac towncar behind it. The hearing’s packed — they had to switch rooms this morning to accommodate the demand. Most of the Michigan delegation is [at the] hearing, including the House members.
Dick Shelby’s talking now. He sounds skeptical (not surprising, given that his state’s Big Three automakers are Mercedes, Honda and Hyundai). More to come soon.
10:47 a.m. This is interesting: Gene Dodaro, the acting comptroller general (a.k.a. the head of the Government Accountability Office) says that in the GAO’s view, the banking bailout legislation Congress passed in October does give the Treasury Secretary authority to channel some of the Troubled Asset Relief Program billions to the automakers. He adds that the big issue would be putting together the right kind of oversight, because Treasury can’t even keep track of what the banks are doing with all their TARP money, and it’s not exactly a department bursting with automotive expertise. Hank Paulson doesn’t want any involvement in this at all, of course. So Shelby asks Dodaro if the Federal Reserve has the authority to advance cash to the automakers like it has done with financial institutions. “Yes, we believe that they do,” says Dodaro. “Historically that authority has been used for financial institutions but in our view it’s pretty broad authority.” (Just as an aside: I think this would be a terrible way to do an auto industry bailout, and I bet everybody at the Fed thinks that too. But hey: It’s legal.)
11:23 Shelby asks the question on everyone’s minds: “I wonder if they’re going to drive back?” (Wagmuldelli, as the CEOs of the Detroit Three will be referred to collectively from now on, do not answer because they still haven’t been called up to the witness table.)
11:50 Ohio Democrat Sherrod Brown, arriving late because of a cancelled flight, says he should have thought ahead and hitched a ride with Wagmuldelli. He adds, “We didn’t ask that the CEOs of the banks drive to town in a Wells Fargo armored truck.” That would have been pretty cool if they had. Or maybe they could have come in the HSBC taxi! (The photo is of a VW bus taxi; there’s also an HSBC Checker cab that drives around Manhattan offering free rides to HSBC customers, but I couldn’t find a picture of it.) Update: Here it is (complete with some pithy anti-free-taxi commentary).
12:00 The Dodaro testimony finally winds up. A mere two hours into the hearing and it’s time for the lead witnesses! One thing pretty clear from the time with Dodaro is that the Senators don’t think Congress can put together any kind of well-thought-out rescue plan this month, and they’d really like somebody else to take charge of things at least until January. The problem is that all of the Bush administration except the Treasury Department has apparently gone home early, Treasury is already overwhelmed with the bank bailout (and they don’t trust Hank Paulson so much anymore on Capitol Hill). Which is where the wacky let-the-Fed-do-it idea comes from. So maybe it’s not so wacky.
12:35 The opening statements seemed unremarkable (the texts aren’t up yet on the Senate Banking site, but the WSJ has a few available for download), so I headed downstairs in the middle of Gettelfinger’s to grab some lunch. This is of course not an option for those in the hearing room. E-mails Jay:
the press are starting to mutter about a lunch break. There’s an odd, but yummy, smell of fried chicken wafting through the room, though a reporter next to me quipped, “that may just be the smell of the Big Three’s panic.”
Jay also reports that the crowd has thinned out and there are now lots of seats available in the back few rows. So head on down there and experience history, D.C. readers!
12:45 Mark Zandi of Moody’s Economy.com is the last to testify, and he says the $34 billion in loans the Detroit Three are asking for probably won’t be nearly enough to keep them all out of bankruptcy. A more realistic number: $75 billion to $125 billion, he says. Zandi seems to be okay with the idea of such a bailout, and thinks it could work. But he’s an economist, so he also warns that it might not work. And he says debt holders have had an awful long time to prepare for a bankruptcy, so that might not be a disaster for financial markets.
12:55 Chris Dodd wants to know if the Detroit Three are gonna build buses and trolleys for the New Age of Public Transit. Well, we do make some pretty big vans, say Chrysler’s Bob Nardelli and GM’s Rick Wagoner. Nardelli and Wagoner are looking a bit less defensive and bedraggled than they did the last time around. Maybe it’s because they didn’t have to sit through an hour of mostly hostile opening statements from the committee members first. Or maybe long car rides agree with them. But Ford’s Alan Mulally is still a hundred times better at this than either of them. He just seems so happy to be there.
1:03 Dick Shelby is, as noted before, being tough on these guys. Says there needs to be a restructuring of management and a lot of lost jobs if they’re gonna survive. Then he gets to the really important stuff: “Did you drive, did you have a driver?” Dodd chimes in: “Where’d you stay, what are you gonna eat?” Then Shelby asks: “Are you planning to drive back? Nardelli says he alternated driving duty with a colleague, and that he planned to drive back. Mullaly and Wagoner say they did pretty much the same. No word on accommodations or menu.
Shelby also asks Zandi when he thinks the Detroit Three would be back for more help if they got $34 billion in loans now. Next fall, Zandi says.
I should note a certain conflict of interest I have here that involves both Shelby and GM. During the 1992 Alabama U.S. Senate race I was tailing Shelby in my brand-new Saturn SL2 as an aide drove him from one campaign appearance to another. His car kicked up a rock that nicked my windshield. And that nick continued to aggravate me for the eight years I owned the car. And I loved that car. So I’m not a neutral party here.
1:41 Chuck Schumer thinks Congress should hand the money to a designee of the president (maybe the Treasury Secretary, maybe somebody else) who will then have power to strong-arm concessions out of the car companies, their creditors, their unions, etc. before actually handing the money over. This is basically what GM was proposing as the role for a federal oversight board, but Schumer thinks time is too tight for a board to get up and running. Everybody on the panel agrees that’s a good idea, although Gettelfinger says this presidential designee won’t be able to do anything about “unfair trade” or health care or other important stuff like that.
1:55 Tennessee’s Bob Corker is in rare form, grilling Chrysler’s Bob Nardelli. First he says he understands why Ford and GM can’t get any money right now, because public financial markets are basically closed. But Chrysler is owned by a private equity firm, Cerberus, and that’s a bunch of rich guys who could put more money in if they wanted to. Yet they don’t want to. [I should add that they're also not nearly as rich as they were a couple months ago, but whatever.] Continues Corker: “We all know we’re only here because of GM. It’s almost like you guys lucked out. You were headed for bankruptcy,” and all of a sudden the possibility of government aid opened up because everybody was so freaked out about GM.
2:10 This is finally getting really interesting. Now Corker, a former builder and real estate developer (and mayor) from Chattanooga has moved on to GM and the UAW. GM has $28 billion in unsecured debt, he says, and currently it’s trading at about 19 cents on the dollar. Bondholders are probably going to be willing to trade in a bunch of that devalued debt for GM equity, but they’ll want to see others take a haircut too. So Corker asks the UAW’s Gettelfinger if the union might be willing to take some of what GM owes it to fund the new union-run retiree health-care trust and trade that for GM stock. Gettelfinger–who yesterday announced some concessions on the health-care trust and other matters–appears to be on the verge of getting emotional. He mentions a GM pensioner who gets by on $322 a month. Then he says, “I cannot answer your question directly without expert advice.”
2:25 Ah, a distraction. While Montana’s Jon Tester tries to ask some questions, he is interrupted by loud chanting. Jay reports:
A dozen or so protestors in the back of the room interrupted the hearing four and a half hours in: “The bailout is a sell out the poor are suffering!” they chanted. A few yelled additional complaints:“The homeless! The homeless!” “Money off the poor people’s backs!” “Put the money in the food banks where people need it!”
2:48 Dodd says he asked the Fed and Treasury to send witnesses to the hearing, but they wouldn’t. He wants them to deal with the problem. “To ask 535 members of Congress in the space of 72 hours to craft something is challenging.” Then Utah’s Bob Bennett (another former businessman) points out that more loans isn’t what the already heavily indebted car companies need. “You need capital, patient capital.” If government were to provide that capital it would be industrial policy of a sort never seen in the U.S., he continues. He doesn’t say that’s necessarily a bad idea. He does say it’s a big decision.
Finally, Bennett argues that a GM-Chrysler merger sounds like a pretty good idea. GM’s Wagoner says yeah, it would be, but the cash crunch got in the way.
3:03 We have now passed the five-hour mark, and I’ve got to head uptown to CNN to tape some segments on the hearing that they’ll apparently use on the Situation Room later. Jay will have the full story (albeit in much shorter form than this post) later on TIME.com.
4:25 Guess I didn’t miss much. My words of blinding brilliance will supposedly be shown on CNN around 5:40 this evening, after an interview with Rick Wagoner. But that could change, of course. Also, one thing I failed to mention while the hearing was going: When did 74-year-old Dick Shelby’s hair turn bright orange? Is this some kind of homage to the late Strom Thurmond? To cite the famous Dave Barry transcript of the Clarence Thomas confirmation hearings:
SENATOR THURMOND: Soamwhoan ben cudrin’ mheah widm tan’ bfust drang.
TRANSLATOR: He says, “Somebody has colored my hair with what appears to be Tang breakfast drink.”
A friend in Birmingham has another suggestion:
Shelby’s new slogan: A red head from a red state.
Said friend also points me to a Birmingham News article that reports that Alabama’s automotive Big Three (Mercedes-Honda-Hyundai) isn’t doing so hot either:
The state’s three automakers said Monday that sales of their Alabama-made vehicles plunged in November as recession-shy consumers shunned showrooms.
Sales of vehicles made in Alabama fell 38 percent in November to 27,353, from 44,436 a year earlier.
8:16 Jay’s article about the hearing is online. Go read it.