Friday, December 05, 2008

Bad News and the Big 3

Over a half-million jobs — that is how many the economy lost in November. That is the worst one-month drop in over 30 years.

This morning, it was also announced that our nation's unemployment rate is 6.7% — the highest in 15 years. Hundreds of thousands more families will have a very difficult holiday season this year on top of the millions already out of work.

These new numbers come on the heels of a report from the Government Accountability Office (GAO) on the Treasury Department's implementation of the Troubled Asset Relief Program (TARP).

The GAO told Congress that the Treasury Department has no way to measure whether taxpayer funds invested in banks are being used in accordance with the purpose of the law - to increase lending. My committee has asked the Treasury repeatedly to track the impact of the taxpayer money. The Treasury has responded that it has no intention of doing so.

The GAO recommended that measures be developed to apply to how individual institutions are using their share of the $250 billion made available to them. In response the Treasury policy is to engage in "further discussions on general metrics for evaluating the overall success of the capital purchase program in addressing the purposes of the EESA."

So in the context of the very bad job losses last month and the refusal of Treasury to monitor the effectiveness of our last large taxpayer rescue package the Big 3 automakers came before our committee today to ask for $34 billion.

Here is what we know:
  1. Without assistance of some sort, one or more of the Big 3 will be gone.
  2. Locally we have 7,200 employees and thousands of auto retirees.
  3. There is no assurance that government investment will save the industry.

Before Thanksgiving the CEOs came to Congress in private planes with a request for $25 billion of taxpayer money but no plan. Today they drove to Washington in hybrids with a plan in-hand and asked for $34 billion. That is some serious inflation.

Ford appears to be in the best shape of the three and may well weather the storm with very little assistance. The other two are in very bad shape and frankly I am not sure what the Congress is going to do at this point. That is the difficult part.

We have their plans, their testimony and their answers to some very difficult questions. The hearing was good and frustrating. It certainly went better than the last hearing, but I feel like we have heard all we are going to hear. It was frustrating, for me, because we really haven't made much progress on what we will do next. We need a plan and we need to vote on the financial mechanics to help the industry.

Our committee will work with the Banking Committee in the Senate as well as leaders of both chambers to craft a bill that can be passed quickly. Waiting helps no one. The longer we wait the fewer cars are bought (no one wants to buy a car from a company that may go under, even if they can get the loan) and the worse the problem gets.