by Frank James updated
The White House just announced it's considering using the Treasury Department's TARP program, the $700 billion rescue fund heretofore used to inject money into the financial industry, to bailout the Detroit 3 in the wake of the Senate's failure to pass legislation.
For Immediate Release
December 12, 2008
STATEMENT BY PRESS SECRETARY DANA PERINO
It is disappointing that while appropriate and effective legislation to assist and restructure troubled automakers received majority support in both houses, Congress nevertheless failed to pass final legislation. The approach in that legislation provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds go only to firms whose stakeholders were prepared to make the difficult decisions to become viable, competitive firms in the future.
Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary - including use of the TARP program -- to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.
While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.
*** Update *** The White House has released the transcript of Press Secretary Dana Perino's discussion with reporters on Air Force One this morning of the White House's latest stance on using TARP funds for the Detroit Three.
PRESS GAGGLE
BY PRESS SECRETARY DANA PERINO
Aboard Air Force One
En Route College Station, Texas
8:44 A.M. EST
MS. PERINO: All right. I will have something for you on the automotive industry vote from last night in just a moment. Just a reminder that we're on our way to Texas. The President is going to be giving a commencement address at Texas A&M University. On board with us today, Congressman Jeb Hensarling, Congressman Chet Edwards, and Congressman Joe Barton. All of them are Aggies. We also have one of our favorite Aggies, Cathy Gillespie, on board with us, as well, Ed Gillespie's wife.
Kim Strassel of The Wall Street Journal is on board, and she will interview the President on this trip. The President recorded his weekly radio address this morning. In it he will talk about the administration's effort to reduce drug use -- that new data that came out this week we've talked about. Also today, ONDCP Director John Walters and actor Gary Senise will host separate sessions of Ask the White House. Director Walters will be talking about those drug use numbers, and Gary Senise was awarded the President's Citizens Medal -- Presidential Citizens Medal on Wednesday, and he will discuss Operation Iraqi Children and the importance of community service.
On the auto industry, I'm going to go through this for you, and then I'll take a few of your questions, and then I'm sure you'll want to do a wire call. President Bush this morning repeated that he's very concerned about the state of our weakened economy, and that he's also very concerned about the ramifications that a disorderly bankruptcy in the automotive industry could have on our economy.
It is disappointing that while appropriate and effective legislation to assist and restructure troubled automakers received majority support in both Houses, Congress nevertheless failed to pass final legislation. The approach in that legislation provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy, while ensuring taxpayer funds go only to firms whose stakeholders were prepared to make the difficult decisions to become viable, competitive firms in the future. That has been our position for some time, as those of you covering it have known.
Under normal economic conditions, we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary -- including use of the TARP program to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.
While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.
That's all I've got.
Q What does that mean?
Q Will you start --
MS. PERINO: Meanwhile, you could relisten to your tape. (Laughter.)
Q Will you start using TARP money now? Are you going to direct the Treasury --
MS. PERINO: I didn't say that. I didn't say that. I said that given the current state of the U.S. economy, we'll consider other options if necessary, and I said including use of some of the TARP; that's one of the options.
Q How soon -- walk us through his thought process right now. Who does he need to talk to first? What decisions need to be made before he decides --
MS. PERINO: He's in regular contact with all of his economic advisors. And so we'll be weighing all of the options and making decisions as soon as we need to.
Q How soon does he feel he needs to make a decision?
MS. PERINO: We didn't discuss that. I mean, obviously we have talked about the urgency of the situation. We have been pushing to get this done; we wanted to get it done last night. Both Congress and the -- the House and the Senate had bipartisan majorities supporting our approach, but they didn't get it over the goal line. And so we have to consider what other options we would take. But I don't have a time frame on it.
Q Are you basically saying that you are going to make the decision -- it's not Congress now? I mean, basically, you are going to make the decision on what to do --
MS. PERINO: Congress spoke. Congress spoke last night. They don't have the votes to do anything, despite having majorities in both the House and the Senate supporting a reasonable approach that we put forward. We thought that the legislation could have even been improved. We thought that senators were making good progress last night and talking about the Corker amendment. But again, it just -- it didn't get the votes that it needed to pass the Senate. They needed 60; I think they had 53.
Q You mentioned the use of -- you mentioned TARP funds as one option. Are there any other options?
MS. PERINO: We're going to weigh all options. I mentioned TARP, as that's been something that you all have been asking about for weeks. And it's just one of the options that's out there, sure.
Q Can you describe the other options?
MS. PERINO: No.
Q Is the Federal Reserve -- cash from the Federal Reserve an option?
MS. PERINO: I don't know.
Q Will the decision be made this week? I mean, it's Friday today. Or is next week --
MS. PERINO: I don't know.
Q Dana, how will the White House be working with the auto companies to determine whether they will have a viability plan or not? How will they work it out?
MS. PERINO: Well, we've been in contact with them regularly and we have been reviewing their plans, we've been actively engaged in looking -- trying to pass this legislation. And I think we'll just have to -- you're just going to have to give us a little bit of time. This vote just happened late last night. It's 8:30 a.m. this morning or 8:45 a.m. Just give us a little bit of time to look at it. But this provides you an idea of where we're headed, which is we think that the current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry.
Q And are you satisfied with the viability plans you've seen so far?
MS. PERINO: I'll decline to comment because we haven't so far and we'll have to take another look at what they might need and how we might be able to provide that as a short-term mechanism to help prevent a disorderly bankruptcy that we think could devastate further an already very weak economy.
Q So you'd still like to see kind of some sort of bridge similar to what the Congress proposed in --
MS. PERINO: I'm not going to describe it in any other way except to say that we're looking at all the options that we could possibly look at, including the use of TARP funds.
Q Did the President meet with any staff this morning before he left, or did he talk to Mr. Paulson?
MS. PERINO: The President saw Josh Bolten early this morning. He got briefed also late last night.
Q Sorry -- this morning -- I couldn't hear. The President this morning --
MS. PERINO: He asked if he'd met with any staff.
Q Yes.
MS. PERINO: Including Josh Bolten and me and Ed Gillespie and I don't know who else, but the President is an early riser and this is important enough that he was up early talking about it.
Q Did he consult with Paulson?
MS. PERINO: I don't know if they've spoken today. I know they spoke -- they speak regularly. I think -- I know they spoke yesterday. So I don't know if they've talked today.
Q Did he have any discussions with senators, Republican senators yesterday to try to convince them or talk to them --
MS. PERINO: -- because the vote came together very late and there was a holiday reception that happened sort of right in the middle of it. And I think some people didn't think there was going to be a vote last night. I think that includes some of you. So I just don't know about that.
Q Could you just repeat that penultimate sentence where in your statement you mentioned TARP money, how you did it?
MS. PERINO: It was in the ultimate sentence. What I'm going to -- this is what I'm going to do: I'm going to let you guys make a wire call and then I'm going to release what I just said so that folks back home can have it verbatim. Is that all right?
Q Yes.
MS. PERINO: But what I said was, given the current weakened state of the U.S. economy, we will consider other options if necessary, including use of the TARP program, to prevent a collapse of troubled automakers. Is that the one you're talking about?
Q Can I make one last try on any time frame on a decision?
MS. PERINO: No. I mean, you could try, but I don't have anything for you.
END 8:52 A.M. EST
Comments
The republicans in congress knew this so they dicided once again to use this for their political gains. Save face at home and know that the right thing (help the auto industry) would get done someway. The country first republicans care more about themselves and their ambitions than they care about the American worker. They are a disgrace.
Posted by: bill r. | December 12, 2008 9:28 AM
Why can't Detroit go to private citizens like Warren Buffet or Bill Gates to get a loan?
Posted by: Jack | December 12, 2008 9:32 AM
Not much else the White House can do except give the autos the money. Bush can’t have a GM/Chrysler collapse as his final act.
More interesting to me is how this comes back to haunt the GOP. Do they get justifiably hammered if Bush doesn’t give the cash and the auto industry collapses overnight?
http://www.political-buzz.com/
Posted by: matt | December 12, 2008 9:33 AM
Our Government should help the auto makers with money - but not with management. .............
http://thefiresidepost.com/2008/12/10/why-government-management-of-auto-companies-will-not-work/
Posted by: Ohg Rea Tone | December 12, 2008 9:35 AM
The Republicans in the Senate are selfish and ignorant zealots. They have done a disservice to the American people. They want to bust big labor and could care less about all the job losses and the families involved. Let's cut Mitch McConnell's salary by 50% and take away most of his health insurance and pension. The White House/ Treasury Dept. need to intervene and get the auto industry a bridge loan.
Posted by: Doug R. | December 12, 2008 10:08 AM
Why is Bush suddenly interested in bailing out someone other than bankers?
Posted by: Pete | December 12, 2008 10:09 AM
This is a fundemental change in the way our government is supposed to function-
The people have spoken through their congressional reps to say no to the government bailout of the auto industry and UAW ... and Bush responds by ignoring this and doing exactly the opposite.
Welcome to the "new" New Deal- hang on tight sports fans-the auto industry is only the beginning of the bailouts.. struggling states are next.
Disgusting
Posted by: heartburn | December 12, 2008 10:12 AM
Bush and the Democrats once again gang up on the taxpayer.
Thank God the Senate Republicans held out for at least a little reform in this pork-laden "bailout" fraud.
Posted by: HopeNChange | December 12, 2008 10:26 AM
To me the main different between the bailout of the banks and the big 3 is this. The change for the banks to recover is good, but the big 3 not so good.
On the news, you hear this bank and that bank laying off ten of thousands of workers, how easy is that for the Auto industry to do the same? not so easy because of the UAW. Unless UAW is willing to make concession(like how about raising the retirement age? 55? most people retire at 65 if they are lucky.) why would the gov want to bail them out? They will just keep bleeding the money out.
Ford might be able to survive without it but if the other 2 fail, that might bring it down with them. So why not bailout the supplier instead and help the one that can/will survive.
Posted by: Tim S | December 12, 2008 10:33 AM
All this sanctimonious twaddle about fiscal responsibility would be more persuasive if it came from persons with integrity on the issue.
We're talking here about $15 bn in stopgap money. It's a lot of money. Indeed, it's enough to last us more than a month in I Wreck. Where was McConnell's "fiscal responsibilty" when it came to thinking about the costs of this murderous, useless war?
This is all about harming unions. Nothing else. Any other explanations are just standard lies by the party that can't utter a truthful word on a bet.
Posted by: a blinkin | December 12, 2008 12:52 PM
Why not file Chapter 11? The automatic stay will halt creditors and the bankruptcy judge will have the power to amend/void contracts, credit arrangements, collective bargaining agreements, etc., all while the companies can continue day to day operations. The companies will have to make tough choices, but they need to.
The people who are adamantly opposed to a bankruptcy are the shareholders, who will see their shares become worthless, and the officers/directors who will likely be replaced. As for the former, I have some sympathy. For the latter, not really. I think labor opposes bankruptcy because they know they will be asked for concessions. They will be in any event. The existing business models are just not working. I think the labor force understands their companies are in trouble, and would probably be willing to make concessions if it were handled in the right way - e.g., ask them for concessions directly proportional to concessions made company wide, including executives. I think when you strip everything away, labor just wants a fair shake and to know they are not being conned.
As far as throwing govt money at this, the question is to what end? To keep teetering companies viable another few months? What then? These problems didn't start with the credit crisis, and they wont go away even if that stabilized. Throwing money at these companies without a viable plan is just kicking the problem down the road at taxpayer expense.
Lastly, everyone is beating this drum about fuel efficient cars. Fine. But what the car companies really need to do is meet the demand of the American public, not blindly build one type of vehicle. What if the big three switch to all tiny, hybrid cars, gas drops to a buck a gallon, and nobody wants them? The big three need to anticipate the demand and meet it, as opposed to blindly following the conventional wisdom of the day that everyone wants fuel efficient cars. Prior to gas prices exploding, SUVs were the niche that the big three were excelling at, and it was the Japanese scrambling to become competitive. Then gas went to 4$ a gallon, and no one wanted SUVs anymore. The point is that the big three need to be flexible enough to anticipate and meet changing demand, and not fall into a trap that building fuel efficient cars or any other type will solve all their problems.
Posted by: Herbie H. | December 12, 2008 12:55 PM