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, becauseā€¦ 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. The Broker.

    You live in an insecure world. Paranoia running wild. The Hand-shake has lost all value.

    April 5, 2009 12:28 pm at 12:28 pm |
  2. Fed Up

    Any business that is unable to produce and sell a desirable and competitively priced product deserves to go out of business. Our government has no right to take money away from cash strapped families to prop up failing businesses. I feel badly for those who would lose their jobs, but they will find something else to do just like those who used to make horse wagons, vinyl records, and beta max tapes.

    April 5, 2009 12:28 pm at 12:28 pm |
  3. Ginny

    The auto companies has keep our economy as well as the Texas oil industry has kept the people of Texas they have not much economic as other states refineries refineries new stories opening , real estate not decling. Bail out the auto companies.

    April 5, 2009 12:31 pm at 12:31 pm |
  4. Michigan voter

    Unfortunately, Debbie Stabenaw has spent the vast majority of her elected life with funding by the UAW. She's the last person to be capable of having an objective opinion.

    On this though, she is correct:

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

    Let's all recall the NorthWest Airlines business model of turning the backs on shareholders, creditors, and retirees – under the Law.

    April 5, 2009 12:37 pm at 12:37 pm |
  5. Antonio

    I think that GM should it have been in bankruptcy long time ago, it's ridiculous to think that the tax payer has to cary a company that is no good for ever.

    April 5, 2009 12:40 pm at 12:40 pm |
  6. DEM in HI

    What is really absurd is the double standard Obama and all of the federal government is using on the auto industry. NOT one banker has been accountable for spending taxpayer money under TARP. In fact, Barney Frank said they do not know how 80% of the money was used. Bankers are still getting the rich and greedy bonuses and we cannot help the everyday worker because why???? It is time to pull the plug on the bankers and help the auto industry with a bridge loan. Yes, I agree they have to change, but the US government caused some of this by letting GM get away with meeting safety and gas restrictions. I would like to buy American, but why would I when they are rated lower in safety and gas savings. Seems to me GM was more interested in quantity than quality of their products. In an economic down turn, people will spend on quality to get something that lasts beyond five years. Time for GM to admit they made mistakes and to come out with a plan to move forward. At the same time, it is time for the government the double standard and to go after the bankers, and just monitor GM and Chrysler, and do nto try to control them.

    April 5, 2009 12:43 pm at 12:43 pm |
  7. RI moderate

    The dems want to protect those union contracts. They can't admit that these bloated, expensive contracts are a big part of why GM is failing – that and a greedy management.

    April 5, 2009 12:43 pm at 12:43 pm |
  8. Tariq

    I think her message is a dangerous one...it says that if you're in the auto industry you're in a business immune to failure. Essentially, they're reaping the benefits of free market without having to compete to stay afloat.

    April 5, 2009 12:46 pm at 12:46 pm |
  9. chris

    Everyone talks about the larger companies going through bankruptcy as if it is a great way for them to survive and employees to keep their jobs. The media never talks about all the suppliers, the smaller companies and their employees who end up not getting paid for their services. No one talks about all the jobs lost as an aftermath of a bankruptcy. The money, the debt does not just go away..many companies who support the larger companies end up in court themselves for years having to deal with the debt collectors trying to collect whatever they can...and it's not even their debt (suppliers). After bankruptcy the media celebrates the larger companies ability to "pull through" and survive. Bankruptcy is for one thing..reducing the responsibility of paying your bills because your company hasn't go the skills to successfully fullfill their financial obligations based on good products and business. It's shameful excuss to survive and the media should stop treating it as a life raft. Yes..I am a small business owner who has gone through this process twice with larger companies and have lost employees, and taken the heat of collection agencies trying to collect from me what others owed. If GM goes the route of bankruptcy it does not solve the problem that they lack a decent product and the skills to handle their responsibilities.

    April 5, 2009 01:05 pm at 1:05 pm |
  10. MD

    The auto industry situation is far more complex for the EXPERTS to resolve. It is absolutely rediculous to attempt to offer a two-line "solution" on this blog.

    If the majority of the STATES in the Union are bankrupt at the moment, why can't a company go bankrupt?

    Years of Republican deregulation of status quo has led the American auto industry to fall behind in the quest for energy efficient vehicles. In order to save the industry at the very minimum, the reserach and development and production of energy efficient cars must become top priority. China is going to be the Japan of the 21st century in terms of threatening the American industry.

    April 5, 2009 01:06 pm at 1:06 pm |
  11. fold the car companies into one company

    they can't compete, run out of money like melted butter

    fold them into one and try, or horror of horrors let them fail and see the new companies that arrise from the ashes

    oh no, that would be a free market, can't have that

    April 5, 2009 01:12 pm at 1:12 pm |
  12. namdur

    The facts stand that GM is in bad shape because they mis-calculated the real requirements of the consumer. If they actually decided to stop making inefficient cars, or cars which can actually give you good value for your money (longer life spans) it would not be in this mess what so ever. Why did Yotota come from behind to beat of GM??? Because Toyota makes a better product and people know it. Why should anyone pay for a car which is davaluated artificially, is made inferior and not keen towards fuel efficiency? America is based on competition, dying car makers need to make way for better companies like ford or toyoya who seem to have it right. Trickle down to lost jobs, well those younger job seekers will eventually be picked up somewhere else. Gone are the days where a HS education guaranteed a good income and labor laws actually kept you employed at higher wages. Today we are in a global economy and you should see what happens when education does not guarantee you employment. You head on over to another country, just like millions of Poles and Hungarians do all over Europe. Sure I'm not saying we need to export our unskilled laborers over to Europe, but we are not entitled to keeping them fed by allowing a lack luster auto industry to siphon money off of the American tax payer. Bailing out the GM pensioners is good enough, they are from times long ago when the GM business plan was to make a 5 year old car obsolete after 100K miles. The rest of the unskilled workers need to understand that the US is no longer the leader as it once was and they might never enjoy such great employment terms anymore. Its a reality check to all Americans since we not longer dominant the global political and financial scene.

    April 5, 2009 01:21 pm at 1:21 pm |
  13. CHANGE we need

    How should bankrupcy NOT be an option for the auto industry. After Sept 11, 2001, the overinflated airline industry 'collapsed'. Nearly every major airline filed for bankrupcy, went out of business, merged or a combination of all three. Sure, the airline industry tanked for a while, but they are coming back in a more managed, efficent way. So what if you have to buy your water and pretzels now...the industry is still in service.

    IF GM or Chrysler have to file for bankrupcy, it is not the end of the world...rather a wakeup call for the unions. Bring manufacturing a car back to reality and not cater to the UAW.

    Let them restructure under one of the bankrupcy chapters. Chop the union's knees out from under them, bring the cost of a car back to reality. So what if the Buick, GMC or other duplicte badged brands under these companies go away. Comparible to the airline industry, all the po-dunk airlines that provided comparible service went away. Why do we need 3 versions of the exact same pick up truck???

    The DemacRATS need to quit the fear mongering and stop supporting the unions. The auto industry will not fold...bankrupcy is not the kiss of death.

    April 5, 2009 01:25 pm at 1:25 pm |
  14. Parker

    There should not even be a discussion of bailing out Chrysler. Chrysler is 80% privately owned by a little private investment company called Cerberus Capital Management LP. That's right, an insanely wealthy company owns 80% of Chrysler, and bailing out Chrysler is on the table? That is ridiculous. They decided to buy up Chrysler in what they thought was a good investment, and now that it has turned out to be the opposite, they want a bail out? Good luck.

    April 5, 2009 01:34 pm at 1:34 pm |
  15. Are you kidding?

    Close em down and stop giving them our tax money. Hope you all come to the Tea Parties on the 15th.

    April 5, 2009 01:36 pm at 1:36 pm |
  16. Parker

    Dave- you don't know what you are talking about. Those retirees will not "lose" their retirements. They are federally GUARANTEED by the PBGC (up to a certain dollar amount, pretty high)... so even if they companies go bankrupt, they will not "lose" their retirement... instead, taxpayers will be paying it.

    April 5, 2009 01:36 pm at 1:36 pm |
  17. kathy, ca.

    "one day at a time" is absolutely correct... and the unions as well as mgmt have no one to blame but themselves

    April 5, 2009 01:47 pm at 1:47 pm |
  18. Texas Teacher

    You know... I keep hearing republicans say that the Auto industry should not be bailed out.... it was fine for Wall Street. Easy to say when you are sitting there with a good job and money coming in steadily that the auto industry should be left to flounder! I'm a teacher, I have a steady income. But I realize that I am one of the lucky ones. I'm also not a christian.... but I can't help but think of that bible saying.... judge not least ye be judged and whatsoever you do unto these the least of mine, you do it also unto me. Come on... stop judging the

    April 5, 2009 01:50 pm at 1:50 pm |
  19. Texas Teacher

    Okay...trying this one more time. Stop judging the Auto Industry's Unemployed Workers! Stop trying to legislate your morality while your Brethern wonder where they will get their next pay day... and how long before their homes are reposed... how will they take care of the needs of their children.... don't even mention higher education for them or retirement! You.... those who want to play russian roulet with someone else's lives... "you need to see that when you start a circle... it comes back to you." In other words, if this country fails... you might be next along with all the rest of us!

    April 5, 2009 01:54 pm at 1:54 pm |
  20. chris

    I keep wondering if in the fashion industry a designer makes a dress no women on the streets would buy, but that it meets government regulations on materials used (environmentally safe) and production (production line costs) then fails, if the designer will go to the government ask for help and whine that the public won't buy it's product.

    The car industry is not producing a product we want. We are not buying it, they can't make money and pay their bills. Additionally, they seem to be run by folks who where raised by parents who did not teach them to be responsible.

    Don't blame the line workers, they are just building the poor product they where told to build, but don't let these guys claim bankruptcy, which will only pass the debt to the suppliers and tax payers and let them continue doing what they haven't been smart enough businessmen to do ...produce a good product we want.

    April 5, 2009 01:56 pm at 1:56 pm |
  21. Bill

    I just love these Republicans don't you they vote no on everything and are not interested in helping anybody but the top 2% period. Senator Corker was another critic of President Bush auto bailout and now President Obama of the auto bailout. Please let's hold the same standard for the auto industy as Wall Street and the Banks.

    General Motors is in trouble but all fault is not in there doing. I seen to recall the stock market tanked under President Bush watch and there were votes from the the GOP and Dems in Congress to keep the ship afloat. Now I ask why can't the GOP vote in support of our new President?

    April 5, 2009 02:04 pm at 2:04 pm |
  22. Bub

    If you don't believe in deregulation your living in the wrong country
    The problem is to much goverment –unions –GM,ford.etc. build as good a car as any body–But they can't keep pulling rabbits out of the hat for
    the demacrats–You can just try to please so many idiots-
    So put it to rest– Us Americans are tired of all the BS

    April 5, 2009 02:18 pm at 2:18 pm |
  23. Super MOD

    GM will never be profitable with their current union contract structure. They have $3500 set into the price of each car they sell to pay for life time retirement benefits. This keeps them from competing with Japanese cars on price alone. Bankruptcy is the only way to go in order to renegotiate the union contracts. GM has more green cars than the competitors. Americans would buy them if they could compete with price. There are many people living off GM who retired early and now get lifetime health care. Does your company offer this?

    April 5, 2009 02:20 pm at 2:20 pm |
  24. Kathy

    We need to let GM fail!!! They need to learn just like the rest of us that greed and corruption will not be rewarded. Let them go bankrupt, then maybe they'll could decide to ditch the unions.

    April 5, 2009 02:41 pm at 2:41 pm |
  25. Sara from Arizona

    Let them go bankrupt.

    April 5, 2009 03:11 pm at 3:11 pm |
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