April 5th, 2009
10:30 AM ET
12 years ago

Stabenow: Bankruptcy should not be an option for auto industry

(CNN) - Bankruptcy for the nation's largest auto companies should not be an option, Michigan Sen. Debbie Stabenow told CNN Sunday.

In an interview with CNN's John King on State of The Union, the Michigan Democrat said she supports the Obama administration's commitment to the auto industry as it tries to formulate a viable business plan to move forward.

"I do not support bankruptcy, certainly as the first, second, or third options," Stabenow said. "I am still very concerned, because… there are 600,000 retirees whose pensions, by the way, would become a federal liability in the worst case scenario in a bankruptcy."

"There are tens of billions of dollars, I've heard upwards of $80 billion in federal requirements, federal dollars that would be needed potentially, if they went into bankruptcy," she continued. It certainly is not my first option. And I know that it's not the first option of the administration."

But Sen. Bob Corker, R-Tennessee, also appearing on CNN's State of the Union, said bankruptcy is a possibility for the beleaguered auto companies.

"I do disagree with the government just coming in and taking over a company like this. I think that was heavy-handed," Corker said in reference to the administration's request last week that former GM CEO Rick Wagoner resign his post. "I think that is something that we'll look back on in several years and be very concerned about but I hope they are successful."

In an interview that appeared on CNN's State of The Union earlier Sunday, GM's new CEO Fritz Henderson suggested bankruptcy remains a possibility for his struggling company.

"[Bankruptcy] may very well be the best solution for the company," he said.

Filed under: Bob Corker • Debbie Stabenow • State of the Union
soundoff (57 Responses)
  1. Dave NYC

    Republicans are singing the bankruptcy tune these days... doesn't anyone wonder why that's not considered "Defeatism?"

    Great idea GOP, just let all those people lose their retirements... you don't care about "the little people" anyway do you?

    April 5, 2009 11:09 am at 11:09 am |
  2. one day at a time

    it's time for these companies to step up to the plate and admit that they have not only failed their companies, but that they have failed America, bankruptcy is the only thing left for them due to their greed and selfish behavoir.

    April 5, 2009 11:12 am at 11:12 am |
  3. lynn in NM

    Don't worry about it Sen. Stabenow. AIG will bail out the auto industry with their billions of taxpayer dollars.

    April 5, 2009 11:12 am at 11:12 am |
  4. Jeff Spangler, Arlington, VA

    Only a nonpartisan federal bankruptcy judge has the necessary power to command the radical and complex reductions necessary for the U.S. auto industry to become competitive five or ten years from now. The companies and unions have demonstrated that they can't do it, and the President's jawboning is as much a waste as the billions we've already spent to keep these dinosaurs alive. Let failure work in our vaunted "free market".

    April 5, 2009 11:13 am at 11:13 am |
  5. ken

    Why is it an option for me? They'd let me go into bankruptcy if I made bad decisions with my money, why should I have to support Detriot for the mistakes they've made when they would never want to do the same for me?

    April 5, 2009 11:13 am at 11:13 am |
  6. barking dogs

    Bob Corker pockets money for foreign car makers that have set up nonunion scab shops in his state.

    April 5, 2009 11:16 am at 11:16 am |
  7. Scott AZ

    The democrats just want to bail out their auto union supporters at our expense.

    April 5, 2009 11:17 am at 11:17 am |
  8. alvino

    Corker disagrees ". . with with the government coming in and taking over. . ." But he thinks that putting the retirement benefits of 600,000 retired American workers at risk through bankruptcy would be O.K.

    It has to be hard to be a right wing nut.

    April 5, 2009 11:17 am at 11:17 am |
  9. David

    The President put his own guy in there and even he's advocating bankruptcy. Bankruptcy is the best solution for the company. It's a tough pill to swallow but *clearly* GM cannot continue the way it is structured now. Tough luck for the UAW but they have not made many concessions to help GM. Under bankruptcy GM can restructure, the albatross of union contracts will be torn up, and ultimately be saved.

    Sure, the Democrats don't like that idea because they have depended on UAW votes in the past. Let this be a lesson that government bailouts are a failed idea.

    April 5, 2009 11:20 am at 11:20 am |
  10. Alfred E. Neumann

    American auto makers have a pattern of poor decisions going back decades.

    It's is a tragedy that the workers will suffer the most but then they can look to the outrageous health care plans negotiated by the unions.

    Sen. Debbie Stabenow – wake up and smell the coffee.

    April 5, 2009 11:24 am at 11:24 am |
  11. Mike Dallas

    I supported the first one for GM but it may be time to let them go and concentrate the efforts at keeping Ford afloat. Ford is in much better shape financially and I think America needs to maintain at least one auto manufacturer for security purposes. I neither work for an auto manufacturer or supplier, nor do I know anyone that does.

    I understand that GM cannot choose reorganization since that would take more than 80-100 billion taxpayer's dollars to pay GM's expenses during the 2 year reorg timeframe because they cannot get credit from the private sector while the reorg takes place. Therefore, they should liquidate instead of reorg. That would cause huge problems such as flooding the market with cheap cars in a time when no one wants them. Therefore, subsidies should go to Ford during GM's liquidation when everyone is buying GM’s cheaper cars and none of Ford’s since they would still be at market value. Also, the battery research and development program of GM should be moved to Ford and not sold during the liquidation.

    Therefore, we could stop sending billions to GM of course we will still spend billions on unemployment benefits and health care cost for the hundreds of thousands that will lose their jobs both for GM and associated industries. Plus the pension quaranty fund will pick up the legacy costs of pensions and when that goes belly up, we taxpayers will once again be on the hook, It will be costly either way, but long term I think it is better to let GM go and liquidate.

    It will very painful and disruptive for many, many people and I truly hate that fact, but, I do think it is time to try and save at least one American automaker and that should be the one that is most viable now.

    April 5, 2009 11:31 am at 11:31 am |
  12. In Michigan

    If GM and Chrysler go bankrupt, we'll be seeing monthly job losses counted in the millions instead of the hundred thousands. It will basically destroy the economy because every aspect of it will be affected.

    Unfortunately, it also seems inevitable.

    April 5, 2009 11:34 am at 11:34 am |
  13. Michigan Jim

    GM and Chrysler will never file a Chapter 11 petition. There's no way Team Obama will ever risk alienating UAW members or retirees by allowing their labor contracts or retirement benefits to be trimmed by an independent bankruptcy judge. Instead, we can look forward to years of additional federal subsidies.

    April 5, 2009 11:40 am at 11:40 am |
  14. JonDie

    Clearly Stabenow is trying to protect her constituents, the auto workers, who ARE making outrageous wages even as their companies die, i.e., both management and the workers are to blame to some degree.

    But since the auto company executives always come out smelling like roses, even when their policies helped drive their companies the edge of bankruptcy, clearly it hurts her politically to have to tell the working constituents that once again they'll have to eat humble pie to save their bosses' big salaries and bonuses and private corporate jets.

    Ironically, a Republican might win her senate seat...by making the worker swallow an ever more bitter bill of a solution.

    April 5, 2009 11:42 am at 11:42 am |
  15. Anonymous

    This buckyee supports the president, but feel bankruptcy is of last resort, and asking rick wagoner to step down went too far. the fault was the bush as president nothing else.

    April 5, 2009 11:45 am at 11:45 am |
  16. Denise

    Dick Cheney's not satisfied with the devastation he's caused already?

    Disgusting and pathetic.

    April 5, 2009 11:45 am at 11:45 am |
  17. The Broker.

    Bank Corrupt! Government Corrupt? A Business, like GM. Can't afford it. Where does that word come from? Bancrupt!

    April 5, 2009 11:46 am at 11:46 am |
  18. Texas Annie *-*-*-*-*-*-*-*-*-*-*

    If the big automakers go belly-up, the trickle down will mean the demise of hundreds or even thousands of smaller businesses who supply the automakers.
    I think it's time we clean house on every questional business seeking federal bailout monies and replace the management with people OVER 65. Honest to God, it seems like we need some people in there who have gone thru hard times before and who understand the concept of working hard, loyalty to employees & customers, and being fair & honest above all. Too many people running the companies today only think in terms of "make as much money as fast as you can and screw anybody who gets in your way".

    April 5, 2009 11:51 am at 11:51 am |
  19. cmoore

    Please stop throwing our tax money we pay in at a dead horse. No one wants these GM and Chrysler auto's anyway. This is why Kia, Hyundai, Honda, Toyota, Mazda and Nissan are kicking their _ss. Stop, Stop,Stop! Goverment should keep their noses out of private sector companies period. Democrats /Obama are only doing this as payback to union voters at the taxpayers' expense. I will never buy a car from a company that received a handout and they should be boycotted, period!

    April 5, 2009 11:53 am at 11:53 am |
  20. Larry Schlueter

    Again, we see a lot of comments without intelligence. Of couse, the Michigan politicans would be saying the things to help herself and not what is possibly best for the USA. Other responders sho little knowledge of the problems. PLEASE, PLEASE, treat the disease rather than the symptom. Ask someone with some knowledge of the automakes expenses . . . it will provide a lot of help on where the problem is located . . . and then tell why other automanufacturers in the USA can make a profit. Please use some valid analysis and some effort for a little intelligence.

    April 5, 2009 11:57 am at 11:57 am |
  21. karuna

    Ms. Stabenow should and must know that the rest of the country ought NOT to have to support the retirees of the auto companies for the rest of their lives even as they desire to live prosperously and enjoyably while the rest of us are on food stamps etc. They have made enough to have several homes and why should they not pay for some of these including their own insurance for health and other benefits? So it had been promised to them, but is it feasible to allow us to keep on propping up these sinking ships while we ourselves are in lifeboats?? Bankruptcy MUST be the only option if we want to make right, all the wrongs of these companies, otherwise all will sink with them.

    April 5, 2009 12:11 pm at 12:11 pm |
  22. Soren

    What does Ms. Stabenov know about GM, bankruptsy, business, etc.
    Give me a break!
    GM has had disastrous lack of brains and leadership for years.
    To little, to late and to wrong about everything.
    Besides, the fundamental idea about 3 "large" american car
    companies, beating eachothers brains out with price discounts,
    huge buraucratic management structures, huge retirement and union
    commitments, no strategy, living in total denial, etc, and being beaten
    to death by Toyota, is totally stupid. And we are now all paying a huge
    price. It is not the workers fault. It is stupid and irresponsible top-
    GM is bankrupt and should go into Chapter 11 now. Chrysler
    should just go away. (Hedge funds expertise!!)
    Ford should be given whatever and few valuable assets are left,
    and take up the fight against Toyota, etc.
    This is not brainsurgery.

    April 5, 2009 12:17 pm at 12:17 pm |
  23. Ken in NC

    Bob Corker pockets money for foreign car makers and wants to see American car makers go broke. He should be locked away at GITMO with Cheney.

    April 5, 2009 12:20 pm at 12:20 pm |
  24. Washingtonian

    The only ones advocating for the demise of GM are those whom are still lucky enough to have jobs and healthcare and pensions. I see lots of UAW bashing without one critic admitting that the UAW has been making concessions for the past few contracts. Let's face it, corporations have said they are closing up shop and going overseas due to high costs of healthcare. Now they are going after what is left of the the private sector Union membership (approx 8%), saying they have to file bankruptcy and close up shop due to not enough concessions from greedy UAW members. Next it will be that pesky minimum wage law and too many environmental regulations. Let's just face it people, we cannot and will not ever be able to compete with chinese and Indian labor costs and for you union critics who think they should, your job will be next.

    April 5, 2009 12:23 pm at 12:23 pm |
  25. Dan, TX

    If we can take all the retirement from the autoworkers, why don't we just take the retirement money from everyone to help pay down the national debt?

    We can also reduce medicare costs with a cutoff date, say when you reach age 75 or 80, when no more medical benefits will be provided by medicare and medical expenses must all be paid out-of-pocket. Life saving treatment must be outlawed for those who can't pay. They can die at home or we can have euthanasia clinics.

    April 5, 2009 12:24 pm at 12:24 pm |
1 2 3