Automobile Industry Loan

Mr. CARPER. Mr. President, what I want to do is take the next 8 or 9 minutes to talk about the issue we are waiting for, waiting to address here hopefully later this evening, and the issue is whether we are going to provide--not a grant, not a gift, not a bailout to two auto companies, GM and Chrysler, but whether we are going to provide them a loan.

Some of you recall 28 years ago when Chrysler was in difficult straits and their CEO, Lee Iacocca, called on the Federal Government to provide a loan. We did not do that; we provided a loan guarantee. Chrysler made a lot of changes within the company to reduce their costs, to make them a low-cost provider of vehicles, and they came back to health. The loan was repaid. Federal taxpayers actually made money, about $300 million on the deal, because we had taken--in return for taking on the risk of making that loan, we got warrants, and we converted those warrants into stock, which Treasury sold and made about $300 million.

Today, I think the thing that has been dragging this process down is the question of, as we think about providing a loan to Chrysler and a loan to General Motors, what can we do to make sure that within that company--labor, management, bondholders, lenders, dealers--how do we best ensure that they are going to make the further sacrifices, shared sacrifices, to make GM and Chrysler a lower-cost competitor, so that when they emerge from this process and begin operating with these loans, how can we make sure they will be successful, not just for a couple of months but how are we going to be encouraged that they will be successful for years--actually, for decades, as Chrysler was subsequent to our 1980 involvement.

The two positions that we are looking at--one is a negotiated deal by the White House and by Chairman Dodd and others here in the Senate that says we want to put in place a car czar--sort of like a trustee, if you will, almost like a bankruptcy trustee--whose job it would be to work with the relevant stakeholders, folks I already mentioned--labor, management, lenders, bondholders, dealers and others--to ensure that they make the kinds of sacrifices and reductions that will lead to making GM and Chrysler more vibrant, more competitive when the economy recovers and people start buying cars, trucks, and vans again. So on the one hand, that is what the administration has proposed and what Senator Dodd and others have negotiated with them.

On the other hand, we have some of our friends on the Republican side here in the Senate who believe it is appropriate for the Senate almost to sort of stipulate the conditions of this shared sacrifice, almost for the Senate to serve not exactly but kind of like the bankruptcy judge or almost to be the car czar itself and to put those changes in legislative language.

So those are sort of the two positions where we are, and we have been sort of in a logjam for much of the day. I am encouraged that there is still good will on both sides, and a lot of folks have been involved in these negotiations. Hopefully, we are finally coming closer to some consensus, and not one where we actually have the Congress playing the role of bankruptcy judge but we do take some steps to better ensure that the additional cost savings that are needed are realized so that these companies will be successful for a long period of time.

I rode down on the train today. Before I got on the train, I ran into somebody. Like our Presiding Officer, I like to work out almost every day. I stopped off at the central YMCA in Wilmington. While I was there, this one fellow who had just bought a Chevrolet came up to me.

He said: Tell me that if you all are going to do something, I will still have a dealer to take my car to to have it serviced and for the warranty to be good.

I said: There is nothing I can promise you for sure, but we don't want to just walk away from the industry and see these folks go down.

But I am convinced there are a lot of people who, frankly, would like to drive a car, truck, or van, and they might want to buy a product from Ford, Chrysler, or GM. Before they do that, they want to make sure the dealer and the company will be around for a while, for however long they will own their vehicle, so if they do have a problem and it needs warranty work they will get that; if they have a problem in the years ahead and they need parts, they can get them; if they need service, they will be able to get that as well. That uncertainty is keeping people from buying vehicles.

The other factor is the captive financing arms of the car companies--GMAC, Chrysler Financial, and Ford Financial. They not only help provide people who want to buy cars with loans to enable them to buy their vehicles, they also help finance dealer inventory. If a dealer wants to finance inventory, they have to get the money from someplace. Sometimes they can get it from the local banks, sometimes they can't. Sometimes they get that financing from the captive finance vehicle of each of the auto companies.

The captive financing arm also will make loans and then they will take those loans and bundle them and securitize them and sell them around the country and around the world to provide more money to be used to either finance auto loans or, in some cases, finance the inventory for dealers to put on their parking lots and showrooms. As we go through this, one of the things we have to do is not only hopefully work out this deal so we figure out who is going to play the role of the Federal bankruptcy judge with respect to these two companies, without going into bankruptcy, so we can make sure these companies will be around and provide warranty work and parts and service, but how do we make sure the captive financing arms start working again as they are supposed to.

We have a lot of banks that haven't been providing the kind of loans to families, small businesses for working capital, for kids to go to college and people to buy homes and cars. We have been working on that for a couple months. Liquidity is freeing up a little bit. But as we deal with that and with the more immediate issue of the near-term survival of Ford and Chrysler and GM, it is important that we also keep in mind the captive finance arms and how we can make sure they are in a position, like banks being able to lend money, the financial arms of the car companies are able to lend money as well. That may be a battle for another day but not very far down the line.

I am encouraged that some progress is being made. I wanted to express my thanks for the people of Delaware. We have a Chrysler plant in my State that has been there for about 60 years. We make the SUVs for Chrysler. We build the Dodge Durangos and the Chrysler Aspens. They were selected as the best SUVs in terms of quality by JD Powers. That plant will be closed in 20 days, a plant that I have worked to keep open for 28 years. It is painful for me and for the people who have worked there, who still work there. But it is going to happen. We have a GM plant not far from there in Wilmington where we make all the Saturn Skys. We not only sell those in this country, we sell them around the world. We export them to South Korea. We sell the Saturn Sky in about 15 or so countries in Europe. It is a very good vehicle. We are proud of the work they do. I have believed over the years in making sure these plants stay alive and make a good product. They do a great job on quality, productivity, and labor-management relations. We are very proud of both plants and their workforce, management and labor people, and the record they have achieved.

We want to make sure our Chrysler plant, as they are shut down and a lot of people are going to be losing jobs, we want to make sure the folks who work there, the people who build the Durangos and Aspens, we think those are hands that can also build windmill turbines for the windmill farm we will put off the coast of Rehobeth Beach starting a year or two from now. Those are hands that can build solar energy panels and can build homes with geothermal heating and cooling, can build a new nuclear powerplant on the other side of the Delaware River. There is plenty they can do in terms of providing clean energy, in terms of providing us with a reduction in fossil fuels, and to enable us to build products that we can sell around the world to reduce our trade deficit. I think it is important, as we face a very sad closure of our Chrysler plant in Newark, that we have in place not just in Newark but in all kinds of plants around the country training programs that will help people who have a good work record. They want to be gainfully employed. They have good skills. Let's make sure they have the opportunity to find jobs where they can make a real contribution.

I see we are joined by the Senator from Utah who may or may not want to speak. He is approaching the Presiding Officer. It is always good to work with him. His presence always augers well for us doing something constructive. Keep up the good work.

I yield the floor and suggest the absence of a quorum.

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