Congress Ponders Auto Bailout Next Week

The future of the Detroit 3 automakers could be at stake in Congressional hearings next week into the sorry state of the U.S. auto industry, and whether taxpayer money should be used to help bail the industry out.

The Senate Banking Committee, led by Connecticut Democrat Chris Dodd, goes first, with a hearing on Tuesday, Nov. 18, “Examining the State of the Domestic Automobile Industry.”

Dodd has signaled he’s in favor of helping the industry. However, he’s also been quoted wondering aloud whether it would be better to wait until the Obama Administration takes over the government in January, instead of trying to get an auto industry bailout through a lame-duck Congress and past a Republican president.

The ranking member of the Banking Committee, Republican Sen. Richard Shelby of Alabama, has already said he’s not interested in helping bail out the Detroit 3, using the memorable phrase, “This is not a national problem, it’s their problem.”

Spokesmen for the auto industry are already apoplectic at the statement. “We couldn’t disagree with the senator more,” said Marc Cannon, a spokesman for AutoNation Inc., the nation’s largest auto dealership chain.

“Clearly we were in a down cycle, but it wasn’t the auto industry’s fault that subprime mortgages went bad, or that gas prices went up,” he said. “It’s not just Detroit that would suffer, it’s parts suppliers, research and development for the entire country’s manufacturing industry.”

In the U.S. House of Representatives, the Financial Services Committee is led by Massachusetts Democrat Barney Frank. House Speaker Nancy Pelosi on Nov. 11 assigned Frank to draft legislation that would provide “emergency and limited access” for the auto industry to funds from the $700 billion financial-services industry bailout.

The House committee will have a hearing on Wednesday, Nov. 19, “Stabilizing the Financial Condition of the American Automobile Industry.”

Pelosi has stressed that any auto industry bailout would have plenty of strings attached. “Emergency assistance to the automobile industry would be conditioned on executive compensation restrictions, a prohibition on golden parachutes, rigorous independent oversight, and other taxpayer protections to ensure that any companies that benefit from this assistance – and not the taxpayers – bear the full burden of repaying any costs that are incurred,” she said in a written statement.