January 21st, 2009
04:09 PM ET
8 years ago

SIU: Frank talk on corporate jets gets a good grounding in Congress

[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/01/21/art.frank1.gi.jpg caption="Why did Frank tone down the tough talk?"]WASHINGTON (CNN) - When those automakers flew to congress in corporate jets to ask for a taxpayer bailout, no one was more upset than the powerful chairman of the house financial services committee, Rep. Barney Frank of Massachusetts.

So irate over the use of corporate jets, Frank was determined to make sure it never happened again. His plan: no corporate executives coming to Washington asking for bailout money would be allowed to travel in those multi-million dollar symbols of excess.

To make sure corporate America got the message, Mr. Frank dropped a provision into the latest bailout bill, H.R. 384, the TARP Reform and Accountability Act, requiring would-be recipients of taxpayer funds to dump their corporate fleets. The message: If you want taxpayer money, sell your jet and fly commercial.

That sure sounded tough. And it sure sent a message to the automakers. When they came back to Washington, they drove.

But last week, Rep. Frank quietly stripped the no-jet provision from the bill. Why?

In a word: Kansas.

Kansas is a hub of aircraft manufacturing, particularly the making of corporate jets. One of Frank's fellow Democrat congressmen, Rep. Dennis Moore of Kansas, sent the powerful chairman a note that delicately suggested he re-think the tough talk.

"We have to be careful about Congress overreacting," Moore wrote in a statement.

What he told CNN he wrote to Chairman Frank was more diplomatic.

"It is clear that the auto executives were insensitive to American taxpayers when they flew in their private jets to request billions of dollars," wrote Moore. "But I have concerns that applying this well-intended provision may have unintended consequences of hurting the general aviation industry and its workers."

The congressman pointed out pointed out that 44,000 workers in Kansas work directly for the airplane manufacturing industry, and a lot of families depend on those paychecks. Last Tuesday, the "no-fly" language was dropped, and yet another get-tough message from Congress got a soft landing.

Late today, Chairman Frank sent a statement to CNN explaining his decision. "The private aircraft industry is an important industry in America, and it plays a necessary role with businesses in certain areas of the country," he wrote. "For example, there are a number of communities that do not have commercial air service available for hundreds of miles. Some of these communities are already in economic distress, and denying businesses the ability to use private aircraft further disadvantages these businesses and seriously impacts thousands of American jobs that provide services to this industry.

"I heard from many members of Congress from both parties representing a half a dozen states expressing concerns of their constituents in regard to this matter and hence why we further reviewed the issue and ultimately removed it from the legislation."

Filed under: Barney Frank
soundoff (97 Responses)
  1. Charlie

    The automakers greeting congress in private jets was both rude and symbolic. It appeared as though the wealthy executives were looking at for themselves and not the average working American. This may not be the case, but it looked that way. They should not be banned from using private aircrafts because sometimes it is a necessity. They could reduce the number of planes in their fleets, and only fly private when it is absolutely necessary.

    January 21, 2009 06:54 pm at 6:54 pm |
  2. Larry C. in Houston TX

    Diane – they typically only work 4 hours a day, and "hide" for the other 4.....I know – I've been there, done that......I was a AFL – CIO Union
    Worker working at a factory for 28 years, until they shut it down....
    Now I know.....That's why they are shutting down factories all over the U.S. (especially if they are union) The Company cannot control the union, and the workers know they can get by with anything, and never get fired, because the union keeps backing them, lying for them & so on....( I was a union stewart at one tiime) ( and had to lie for people)

    January 21, 2009 06:57 pm at 6:57 pm |
  3. Fred

    The auto companies would save really big bucks IF the Govt would really get serious and push thru legislation in some areas that add big bucks to the cost line, and get tough with the auto folks on the bigger issues like only 3 brands at most to cover Good, Better, Best, and limit models so there is not overlap in all types and price points within the brands, and force the union to give up on the work rules, bumping, paid time off excess, company paid union representatives numbering 20 or more at larger plants (they do not work production, they just "represent" full time and overtime) and other pork provisions that management and the unions agreed to over the years AND raise their medical & dental premiums to even 75% of the national average for active employees/those on layoff/retirees, take away free/very low cost company cars from the thousands of managers getting them, and many other wasteful provisions that exist for both union and management people...both active and retired. The govt should also change the laws to allow some changes to be made to the retirees instead of forcing the company to keep those pensions in the top 10% of pensions in the USA. The govt needs to change some laws to allow this to happen, and also to allow them to cheaply close down maybe 1/2 of their dealers without huge costs to avoid law suits. The govt needs to address tort reform to limit law suits against companies. Why continue paying lawyers millions to bring these suits...WHY? because the lawyers are such a powerful lobby group, and many politicians started as lawyers or become hired hands in these firms when they retire or get voted out. Should the lawyers be able to add hundreds of millions of dollars of cost to companies? Can EVERYBODY start with a clean sheet of paper and be fair yet eliminate pork & waste...the management, the unions, and the govt ?? Why would taxpayers pay the price for these bailouts and then allow the auto and banking employees and those retirees, and lawyers, to maintain provisions that are clearly among the best in the country ? Does this make sense...heck no !

    January 21, 2009 06:59 pm at 6:59 pm |
  4. dn

    funny, i don't seem to have heard barny say anything about the 500+ private jets that were scheduled to show up for the inauguration....

    January 21, 2009 07:01 pm at 7:01 pm |
  5. anonymous

    This is so stupid, what the hell is Barney Frank thinking? What a failure, failure to take a stand, failure to take a firm position. Though I am a democrat, I must say the Democratic congress fights for its laws the way jello fights a fork.

    January 21, 2009 07:01 pm at 7:01 pm |
  6. John O

    Hi Jack,

    Everyone thinks that the planes represent a Motley Crue Rock Star lifestyle, which in the entertainment business it certainly does; however Corporate jets especially for those businesses which have multiple locations are essential. Namely, if 75-100 people fly back every 2 weeks to and from 1 location that is roughly $100,000 per month based on an average of a 14day advanced $500 commercial ticket. In the auto industry where extensive travel can rang 12-16 months on average would equate to $1.2-1.6M. Imagine 2 or 3 locations that are working simulataneously would equate to ~$3M a year. By singling out the highest executives, all workers in the company lose.

    In the end most companies lease their airfleet and write down the expenses similar to commercial travel on the balance sheet as we know. With Barney Frank and Nancy (speaking of a Rockstar with her taxpayer paid jet) they have not only caused the ultimate firings of the corporate flight crew and support staff, but they have caused people who still have a job and still require to travel to spend more time at locations away from their families than what would be required.

    Something to consider CNN, do you allow Wolf Blitzer to fly on commercial when on business? How about support staff? Do they all ride the Madden Mobile look alike? Appreciate you letting me vent...

    January 21, 2009 07:02 pm at 7:02 pm |
  7. dn

    did barny happen to say anything about the 500+ private jets that were scheduled to show up in dc for the innauguration?

    January 21, 2009 07:02 pm at 7:02 pm |
  8. Kendrick Shavkey

    Okay congress needs to get off the auto industries back when it comes to corporate jets. I have Ford guys come to my hotel and stay and they use corporate jets. It keeps the cost down because flying commercial can be expensive. So its actually cheaper to fly private jets. Get a grip!

    January 21, 2009 07:04 pm at 7:04 pm |
  9. anonymous

    I mean they have some nerve, the congress, to actually "tone down the tough talk." for god's sake this is capitalism, and if we are going to give these freak companies some money, the accept OUR terms. NO jets, NO golden parachutes, and if you don't like, Ford or GM, why don't you go to hell. Honestly the congress MUST be tough, it seems just when a nice piece of legislation is pending, someone always goes and screws the whole thing up. Thanks Senator Barney Frank, thanks.

    January 21, 2009 07:05 pm at 7:05 pm |
  10. Michael

    Barney Frank was correct the first time, Dennis Moore needs to go. Just because the big three should not fly corporate jets to ask for money doesn't mean the whole aircraft industry will fail. And don't talk about time is money?? if corporate exec's did their jobs they would not be in a mess. Where does everyone get the idea that if your an exec your important? IT'S THE WORKERS WHO ARE IMPORTANT. enough said

    January 21, 2009 07:05 pm at 7:05 pm |
  11. Herbie


    January 21, 2009 07:07 pm at 7:07 pm |
  12. Bill McCullough

    Shouldn't we investigate members of congress who fly corporate jets or larger? I've seen posted that Nancy Pelosi flys back to California in a 200 seat jet aircraft at a cost to the taxpayers of $60,000 each trip.

    January 21, 2009 07:08 pm at 7:08 pm |
  13. Bugs Bunnys back

    @Diane.You must be a CEO,making 400 times the average laborers.Stop telling outright lies and listening to the likes of Limbaugh the commie.

    January 21, 2009 07:10 pm at 7:10 pm |
  14. Ted

    Ah yes, let's complain about Corporate America and their extravagance in air travel. Hrmm, well then again aren't SENATORS and CONGRESSMEN allowed to utilize "corporate" transportation"? How about THIS America...next time Corporate Government no-loads want to raise your taxes to pay for more pork in Washington let's tell THEM they have to start walking to work and give up all THEIR perks of the job. You'll find that they'll start back-peddling pretty fast. NO ONE has a better RETIREMENT and HEALTH CARE system than our GOVERNMENT! Their retirement is pretty simple....they just don't show up for work anymore. The pay doesn't change and neither do the benefits for them and their family for LIFE! uh huh. can't you just SMELL the equality now!!

    January 21, 2009 07:19 pm at 7:19 pm |
  15. juniorb

    legal in nc -- common sense – prioritizing. Besides, they are in this mess not because of their jetsetting but because of their ineptitude, among other things.

    January 21, 2009 07:23 pm at 7:23 pm |
  16. Get Real

    I think Franks and Dodd should be removed for the mess with the housing markets. People blame Bush for everything when these 2 are to blame for the Mortgage mess.

    January 21, 2009 07:29 pm at 7:29 pm |
  17. Fred

    I would just like to remind that although nuthing untoward has happened since 9-11 like 9-11, but commercials still have their moments (i.e. US Airways recent lucky close call). They are not a safe bet, and if you have options ... use them. I would seriously question these executives judgment if they did took commercial, appearances notwithstanding .. appearances aren't always what they seem ...

    January 21, 2009 07:31 pm at 7:31 pm |
  18. Mat

    Well since it's technically impossible for any problem to have more than one factor we should put the Union on one side of a coin and the Execs on the other. We can finally figure out who messed this up.

    Also how on earth is it cheaper to fly a corporate jet unless you're filling it to capacity everytime?

    I think it's a good idea that they should have to sell their corporate luxuries to get tax payer money, and to the thought that an executive can't conduct business without a corporate jet? Were you actually being serious? It's a perk and makes their lives easier and not a necessity.

    But I agree with you 100% juniorb, it's just not that important right now.

    January 21, 2009 07:35 pm at 7:35 pm |
  19. Mike, Syracuse NY

    How Barney Frank's district keeps reelecting him time after time is a major mystery. Someone must be dumping mind control drugs in the water supply.

    January 21, 2009 07:38 pm at 7:38 pm |
  20. DavidinCA

    See how awkward it is when government tries to get this intimately involved in private industries? This is a very small example of a very big problem. The bailouts overall will very likely be big examples of the same big problem and then we all will have learned an expensive lesson.

    January 21, 2009 07:39 pm at 7:39 pm |
  21. Kurious

    Odd (or perhaps not) that SIU didn't mention that Senate Majority Leader Nancy Pelosi (D-CA) demanded that the government, in the form of the U.S. Air Force, provide her with its equivalent of a corporate jet to run her around wherever she wanted to go, whenever she wished. She then rejected the first aircraft offered as it was too small to carry her and her entourage. I suppose she feels lucky that she is a senator, not a CEO. I guarantee that the cost of flying one of those planes is nearly as much as for a private aircraft of the same type (perhaps more, given the way the government spends money) and every penny of the operating cost comes from the taxpayers.

    January 21, 2009 07:40 pm at 7:40 pm |
  22. Lev

    There is absolutely nothing wrong with executives using their jets. These corporate "toys" become corporate necessities when an executive reaches the CEO status. At that level, executives need to spend more time thinking about business at hand than booking their tickets or waiting at airports. It's the same as we probably shouldn't be asking the President of the United States to take commercial flights. This is not part of executive compensation. It's part of running the business.

    Executive compensation, however, is another story. Cash taken out should be directly related to profits earned.

    January 21, 2009 07:43 pm at 7:43 pm |
  23. Mike

    Why not start at the top? Air Force One is a private jet funded by taxpayers to fly the highest executive in the country (paid by taxpayers).

    If it's a good idea (highly unlikely, considering the source), let's set the tone at the top.

    January 21, 2009 07:44 pm at 7:44 pm |
  24. pam Eugene OR

    Franks is a real idiot and he should be fired. He watched all this happening to America and did not say a word. He is a fool who is now trying to back track and cover his own mistakes. I am as liberal as they come and happily voted for Obama but Franks is an outright fool. He thinks he can make big speeches and growl real loud and we will all forget that this happened while he was the head of the finance committee. Please Franks: sit down and shut up!!!!!

    January 21, 2009 07:45 pm at 7:45 pm |
  25. Independant Thinker

    The news stated that over 600 personal jets flew into Washington D.C. to see Obama innaugurated, thus causing the single most man made GLOBAL WARMING event in history.

    Gotta love those libs, Do as I say, not as I do.

    January 21, 2009 07:47 pm at 7:47 pm |
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