November 21st, 2008
03:35 PM ET
6 years ago

Pelosi, Reid detail demands from auto companies

(CNN) - House Speaker Nancy Pelosi and Senate Majority Leader harry Reid have issued a leader to the CEO's of the big three auto companies, first obtained by CNN.

The letter lists the deails of exactly what they want submitted by December 2.

Full text of the letter after the jump

Text:

Dear Messrs Wagoner, Mulally, and Nardelli :

We recognize the importance of the domestic automobile industry and are committed to working with you to ensure its viability in the years to come. One in 10 American jobs is related to auto manufacturing; our national security depends on the industry’s technologies and manufacturing capacity; and our competitiveness in a global economy depends on its pursuit of excellence.

As you know, Congress has provided President Bush, the Chairman of the Federal Reserve, and the Treasury Department the authority they need under the Emergency Economic Stabilization Act (EESA) as well as other authorities to provide short-term financial assistance to the auto companies.

Unfortunately, the Bush Administration and the Federal Reserve have thus far declined to use their powers to improve our nation’s financial stability by assisting the auto industry. Notwithstanding existing authorities, this Congress is prepared to consider additional legislation that would give the assistance you seek, provided that you submit a credible restructuring plan that results in a viable industry, with quality jobs, and economic opportunity for the 21st century while protecting taxpayer investments.

In order for Congress to act in a timely manner, this plan must be presented to Congress by December 2nd, specifically to Senate Banking Committee Chairman Christopher Dodd and Financial Services Committee Chairman Barney Frank.

It is critical that you meet this deadline since we have announced we are prepared to come back into seion the week of December 8 to consider legislation to assist your industry. We intend to give pertinent agencies within the executive branch, the Government Accountability Office, the Board of Governors of the Federal Reserve, as well as outside experts, the opportunity to comment on your work.

The plan must:

· Provide a forthright, documented assessment of the auto companies’ current operating cash position, short-term liquidity needs to continue operations as a going-concern, and how they will meet the financing needs associated with the plan to ensure the companies’ long-term viability as they retool for the future;

· Provide varying estimates of the terms of the loan requested with varying assumptions including that of automobile sales at current rates, at slightly improved rates, and at worse rates;

· Provide for specific measures designed to ensure transparency and accountability, including regular reporting to, and information-sharing with, any federal government oversight mechanisms established to safeguard taxpayer investments;

· Protect taxpayers by granting the most senior status for any government loans provided, ensuring that taxpayers get paid back first;

· Assure that taxpayers benefit as corporate conditions improve and shareholder value increases through the provision of warrants or other mechanisms;

· Bar the payment of dividends and excessive executive compensation, including bonuses and golden parachutes by companies receiving taxpayer assistance;

· Include proposals to address the payment of health care and pension obligations;

· Demonstrate the auto companies’ ability to achieve the fuel efficiency requirements set forth in the Energy Independence and Security Act of 2007, and become a long-term global leader in the production of energy-efficient advanced technology vehicles; and

· Require that government loans be immediately callable if long-term plan benchmarks are not met.

The auto companies’ shareholders, business partners, and prospective benefactors—the American people—deserve to see a plan that is accountable to taxpayers and that is viable for the long-term. In return for their additional burden, taxpayers also deserve to see top automobile executives making significant sacrifices and major changes to their way of doing business.

We look forward to working with you to ensure a viable American automobile manufacturing sector for decades to come. If we are successful, we can ensure a brighter future for the automobile industry, our nation, and our planet.

Thank you for your prompt attention to this matter.

Sincerely,

Nancy Pelosi Harry Reid

Speaker of the House Senate Majority Leader


Filed under: Congress
soundoff (164 Responses)
  1. hugh ~ california

    "Our liberty depends on the freedom of the press, and that cannot be limited without being lost." — Thomas Jefferson

    November 21, 2008 06:37 pm at 6:37 pm |
  2. Mike

    The Government caused this mess, why would anyone believe they can solve it? The big three of Pelosi, Reid and Dodd should resign immediately-hopefully Frank and Cox will follow. I am stunned by the stupidity of this Congress.

    November 21, 2008 06:45 pm at 6:45 pm |
  3. brian

    Spelling . . . . It's a good thing.....

    November 21, 2008 06:47 pm at 6:47 pm |
  4. ezed

    So the nannies Harr-iolsi want a business plan, do they? And they will absorb and understand it in 6 days?

    I doubt either of those clowns could comprehend the function of a pinion gear in 6 days.

    Had they sent me that high and mighty letter, I would identify a soft warm place they can put their money – a lot of it my own – and proceed directly to Chapter 11 bankruptcy court.

    November 21, 2008 06:48 pm at 6:48 pm |
  5. Gerry

    Pelosi & Reid need a plan for 25B to the auto makers what was the Plan for the original 700B

    November 21, 2008 06:51 pm at 6:51 pm |
  6. StuckInSD

    This money is going to be used to downsize and restructure, anyone who thinks that the auto companies are going to get enough money to convert all of their products into flex/hybrid products is living in fantasyland. No way are they going to get that sort of cash.

    November 21, 2008 06:51 pm at 6:51 pm |
  7. William of Denver

    What a golden opportunity to bring the automobile manufacturing workforce compensation and benefit packages in line with other manufacturing jobs. It presents an even better opportunity to shrink the gigantic gap between executive compensation and the front-line worker.

    Nancy Pelosi and Harry Reid need to take a look at the recent sacrifices made by Haruka Nishimatsu, CEO of Japan Airlines. Then, ask CEO's of U.S. Auto makers what sacrifices they have planned to make.

    I predict the difference in sacrifices will reflect an attitude, main the source of the U.S. Automobile manufacturing problems.

    November 21, 2008 06:51 pm at 6:51 pm |
  8. SHIRAZ KAY

    YES DO NOT BAIL THEM OUT AS WE ARE NOT SOCIALISTS OR COMMUNISTS.OPEN YOUR BUSINESSES IN ASIA AND WORK WITHIN YOUR BUDGETS JUST LIKE ORDINARY NORTH.AMERICANS

    ANOTHER SHOT WOULD TO ASK A REFUND FROM OVERPAID UNION WORKERS OR THE UNIONS HTEMSELVES FAILING THAT ASK YOUR BROTHERS IN TOYOTA OR HONDA MOTOR COMPANIES

    MOVE OR GET ON WITH IT NOW!!!

    November 21, 2008 06:52 pm at 6:52 pm |
  9. happy thanksgiving

    No bailouts at any time.

    November 21, 2008 06:52 pm at 6:52 pm |
  10. vic

    Sounds good to me, but, will the Big 3 agree?

    November 21, 2008 06:54 pm at 6:54 pm |
  11. D E Seattle

    The big 3 need to go bankrupt... plain and simple.

    This will allow them to learn humility and hopefully get them to go back to business 101. Produce a product that people actually want... Buy parts at a reasonable rate... pay your employees a fair rate to manufacture your product... sell the product for a reasonable, yet profitable, price...Give bonuses based on profits only... take care of your employees and customers always.

    Executive compensation shoud be the first reform but right after that should be the renegotiation or cancellation of all UAW and vendor contracts.

    The country's biggest issue with this situation is that Harry Reid, Nancy Pelosi and Barny Frank are the players. I'm horrified at the thought. I wonder if any of these people actually have signed the front of a paycheck before?... I doubt it.

    November 21, 2008 06:56 pm at 6:56 pm |
  12. Dennis

    As a conditionof any bail-out money, the three CEOs and the head of the UAW should be required to resign without any severance packages or golden parachutes of any kind. They led the industry into the tank and should be fired. They could at least do the honorable thing and resign. By keeping the same people, with the same mind-sets, in place, nothing is going to change in the industry. There should also be an aggressive and measurable set of performance metrics with the release of bailout funds tied to performance. If they can't change, and change quickly, they should be allowed to go the way of the dinasaurs.

    November 21, 2008 06:57 pm at 6:57 pm |
  13. sandee in Portland

    As someone who, over the years, only buys american made products including everything from clothing to cars, what can we expect to happen to our manufacuring when the majority of people purchase foreign made products. I recently purchased a new washer and dryer and in researching where they were manufactured, found only 2 brands that are made in the U.S. This is indicative of what's wrong with our economy. We are becoming a nation of service workers only and manufacturing is going out the window. If the car companies disappear, that's it folks. Minimum wage jobs for the majority. By the way, I drive a 2007 corvette and since it's my 7th one, I think GM is great!

    November 21, 2008 07:02 pm at 7:02 pm |
  14. Hawaii Grad

    I believe I have discovered a very reasonable and taxpayer money free, way out of this mess:

    Dear Exxon/Mobil, British Petroleum, ConocoPhillips and Texaco:
    Time to pay the piper! Lend us – your number one reason for existing – $40B to keep us afloat, 'cause if we go down, you go down. If we get the money from taxpayers, they are gonna force us to make fuel efficient cars, so that's the end of your gravy train. Send check ASAP!

    Love, The Gas Guzzling Auto Makers.

    November 21, 2008 07:09 pm at 7:09 pm |
  15. David

    Before anything can be done I think we need to get rid of the union. Their demands for more pay and benefits is just to much as is CEO pay. Get rid of the unions, pay a fair wage and benefit package, cut CEO pay and link it to the success of the company and you will have a great company. Toyota, Honda ande Nissan does it without any major problems and they are building more Plants in the south while our car makers are closing them.

    November 21, 2008 07:15 pm at 7:15 pm |
  16. Christina

    So what should have Congress done when asked for the money? Tell them no!!! This letter writing and proposal submitting with only 8 days to respond is utterly insane.

    Nancy & Narry – you are our leaders. We expect you to be able to say no with a period after it, not No with a comma.

    So if the Big 3 failed, just put the company up for sale on E-bay and see if it gets bought by Toyota, Nissan and Hyundai.

    November 21, 2008 07:17 pm at 7:17 pm |
  17. Steven

    This is a joke – More smoke and mirrors from Queen Knucklehead. Pelosi and Reid are more than ready to hand over the bucks to the UAW – Oops – GM, Ford and Crysler. Does anyone out there actually think that P and R will let the UAW members suffer? No – otherwise Democrats will have a lot of splainin' due at re-election.

    November 21, 2008 07:18 pm at 7:18 pm |
  18. Scott Tucson

    These two twits can't get their own house in order and they're going to tell the auto companies how to conduct run things? Thank God they sat on their hands and didn't try fixing the high gas prices this past summer.

    November 21, 2008 07:22 pm at 7:22 pm |
  19. Juan Grain

    I put together some ideas for a plan to revitilize the 3 million jobs that will be lost when the big 3 bite the dust. While my plan may not be the end all, it might provide some ideas to move forward in a productive way. What the CEO's need to read is the very book they push down the ladder "Who moved my cheese." In the book it clearly points out that sometimes you just have to change, and change to new and strange ventures, strange because they are not familliar, but serve the need and maybe even better than the previous!

    Now, I have a plan.

    The big three go into Bank-O with the Gov right there over the process, ready to implement the program below:

    1. A restructuring that immediately starts conversion to Natural Gas for heavy equip. City Buses, trucks, Big rigs and UPS trucks.

    2. They also develop the pumping stations and conversions for existing vehicles

    3. advance the design and build of High efficiency Hybrids, Hydrogen and full electric cars

    4. Give tax credits to people and companies that convert to natural gas, i.e. UPS, Roadway, City Buses, Gas Stations, and all those that convert.

    5. Where does the money come from? Determine the national security value of what it is worth to America in converting to Natural Gas via the percentage of change over and instead of just giving the money to the Car companies, use some of these moneys/tax credits to expedite the change in those that participate and complete the cycle.

    6. Conduct the changes to the sectors that will allow for the quickest implementation, i.e. like trucking companies and truck stops, UPS, Municipalities.

    November 21, 2008 07:26 pm at 7:26 pm |
  20. Leetinkie

    Where is any reference to requirements of UAW for reduction in labor cost -PAST & CURRENT?, SCREW CURRENT CONTRACTS!!!!

    Take current avrage labor cost for Foreign car companies in US along with average retirement compensation experienced by US top 100 companies. If UAW want agree to cutting their pay and retirement benifits to US average -- then let then GO TO HELL and STARVE!!!!!!!

    Could not happen to a better bunch!!!!

    November 21, 2008 07:29 pm at 7:29 pm |
  21. Adam

    Harry Sherlock asks:

    "Why aren't Toyota and Honda included in any discussions of a bailout package???"

    I drive a Honda, and I can tell you exactly why. Unlike most vehicles from the Big 3, my Honda...

    1. Is 20 years old, pushing 200K on the odometer, and starts up the first time every time regardless if its 100 degrees outside or 10 below.

    2. Gets 25+ miles per gallon. During the worst of the gas prices, $20 got me to work and back for a week.

    3. Is cheap to repair and maintain.

    4. This is the most important one: My Honda was made in the United States of America. It was built by American hands, gave jobs to American workers and put money in American wallets. Can the same be said of the domestic automakers who are shipping jobs to Mexico and Brazil simply to bolster their bottom line? I think not.

    November 21, 2008 07:31 pm at 7:31 pm |
  22. Jen, Cali

    Reid and Pelosi "demand"? They'll accept a lame one-page bullit-pointed "plan" and quip, "Ok, works for us - let's give 'em the bucks"!!!!!!!!!!!!

    November 21, 2008 07:32 pm at 7:32 pm |
  23. JImmy boy

    how silly what moron doubts that the democrats and republicans are going to bail out the unions...i mean auto makers

    November 21, 2008 07:32 pm at 7:32 pm |
  24. Sherry in Kentucky

    The economy is too fragile right now to risk losing over a million jobs. The Republicans didn't do what it took to prevent this mess when they had the House, the Senate, and the Presidency. Give it here and let the dems fix it. Everything the Republicans have touched over the last 8 years has turned to crap. No offense guys, but ease up and give us a chance here.

    November 21, 2008 07:34 pm at 7:34 pm |
  25. Jen, Cali

    dave November 21st, 2008 5:30 pm ET
    Anyone who complains about union labor costs without bringing up CEO pay being 50-100 times union labor pay is willfully ignorant.
    ______________________

    Dave, it's "woefully" ignorant - just thought I'd mention it, since you seem to be so eager to judge others' ignorance but are clearly oblivious to your own.

    November 21, 2008 07:37 pm at 7:37 pm |
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