The consequences of a bankruptcy by the “Big Three” U.S. automakers would be felt nationwide, and Connecticut’s Sen. Chris Dodd has been center-stage in congressional debates on a possible bailout.
As chairman of the Senate Committee on Banking, Housing and Urban Affairs, Sen. Chris Dodd of Connecticut has held hearings on a proposed plan to help the floundering car manufacturers General Motors Corp., Ford Motor Co. and Chrysler LLC. The senior senator has cited the ailing Connecticut auto industry as an example of the cascading effects of the failure of one or all of the troubled companies. Rep. Rosa Delauro joined the Democratic leadership in early November meetings with the Detroit executives — who are asking for a combined $34 billion in loans — to help devise a solution to the automakers’ financial crises.
At Thursday’s hearing on Capitol Hill, Dodd invited James Fleming, the president of the Connecticut Automotive Retailers Association, to testify on the economic crisis on automotive business. After the first round of hearings on the auto industry last month, Dodd met with members of the Connecticut auto industry who gave him sobering news about the state of their businesses.
“I thought it was important to share the views of a businessman on the front lines of this crisis with my colleagues in Washington,” Dodd said in a statement before the hearing. “Mr. Fleming will bring an important local perspective to our witness panel, reminding us that the failure of any one of these auto companies could have repercussions far outside Detroit.”
In his testimony, Fleming said business for auto retailers is already dire due to the lack of financing available from banks. He said a failure of any one of the major auto makers would cascade down to retailers.
“If GM, Ford or Chrysler go bankrupt, our members who retail those cars will also go under,” said Fleming. “There is just no doubt in my mind about that.”
Other members of the Conn. Congressional delegation are supporting the proposed bailout plan but are concerned about giving the auto companies a blank-check.
“A failure of the American auto industry would have severe economic repercussions well beyond just the auto workers,” DeLauro said in an e-mail to the News. “That being said, the government will not just hand over $34 billion dollars. These companies need to make a strong case for these dollars, demonstrating the long-term viability of their companies and a plan to get on a competitive, innovative path.”
At the hearing, executives from the three companies agreed to have a “restructuring trustee” make changes to their businesses to help them survive if they were given federal support.
Sen. Richard Shelby of Alabama, the ranking Republican on the committee, asked the executives to explain how the bailout money would not simply “prop up a failed business model for a few months.”
Even Democrats had concerns about the bailout.
“Be honest and tell me … just tell me, if things stay the way they are now, are you going to be back in a year [asking for more money?]” asked Sen. Jon Tester of Montana.
Dodd has raised doubts about Congress’s ability to pass the bailout. He has called upon the Treasury Department and the Federal Reserve to step up to help the auto companies. He specifically recommended they divert funding from the $700 billion in money authorized to help the financial industry.
The current request by the automakers is $9 billion higher than the one presented to congress just weeks ago — General Motors is now requesting $18 billion, Chrysler $7 billion and Ford $9 billion.
The Associated Press contributed reporting from Washington.