THANKS, BUT...

THANKS, BUT…
Detroit, Michigan has been the focus of Washington, DC this week with the Detroit Three (formerly referred to as the Big Three) auto company’s executives coming before Congress to plead their case for a financial bailout. All three chief executive officers as well as the head of the United Auto Workers union testified before both the House and the Senate relating to their request for a $25 billion bridge loan.
The reaction from both sides of the isle was harsh. The auto makers failure to adapt to a changing economy and their agreements with the UAW have led to a belief that the leadership of General Motors, Ford, and Chrysler were asleep at the wheel for the past few years and the soon to be bankruptcy is a just reward.
All four leaders’ testimony was terrible. They were unable to explain what they would do with the money, how they came up with the dollar amount, how it would be split among the three companies, what changes to their business model they were in the process of implementing so that they would not be back before Congress in a year asking for more money. It wasn’t just Republicans demanding answers, but Democrats as well. In fact, certain Democrats asked the tougher questions. Senator Menendez of New Jersey and Representative Sherman of California both questioned the rationale for Congress providing a bridge loan to the companies. The failure of the executives to explain the need for the loan and what changes to their business model they were either implementing or about to implement basically determined their fate.
Two Republican Senators, Kit Bond from Missouri and George Voinovich from Ohio went to work on trying to come up with a compromise plan that would change some of the conditions to money already allocated to the automakers. Instead of using the $25 billion in Energy Department loans to focus on more fuel efficient automobiles, they proposed using that money in the short term for the bridge loan. Initially, Senate majority leader Harry Reid decided not to allow a vote on such a proposal. However, following the involvement of Michigan’s two Democratic senators, Levin and Stabenow, Senator Reid decided to allow a vote Thursday afternoon. Following a meeting with Speaker Nancy Pelosi, this vote was cancelled. Speaker Pelosi demanded plans for the money to be submitted by early December before a vote could take place. The plans have to be submitted to business leaders, Senator Chris Dodd of Connecticut and Representative Barney Frank of Massachusetts. Both of these men were involved in the credit crisis by their continued support of both Fannie Mae and Freddie Mac. These two “leaders” refused to allow any changes to the actions of Fannie and Freddie and when both institutions failed miserably over the past six months, they claimed ignorance. Now these two are going to be responsible for overseeing the automakers restructuring plans. The American people are now reliant on these two to protect our tax dollars and make sure that any plans submitted by the automakers are credible and a one time deal. Somehow, I am not confident that they have the capacity to even understand basic financial statements…
The other big news relating to Detroit out of Washington this week was the removal of Representative John Dingell as Chairman of the House Energy and Commerce Committee. Speaker Pelosi, unhappy with Dingell over the past several years for his “failure” to institute extreme environmental procedures that have caused the automakers so many problems, allowed fellow California liberal Representative Henry Waxman to challenge for the chairmanship. A secret vote took place (funny how Democrats support secret balloting when they have to make a decision but not for union considerations…) and Representative Waxman won by 15 votes. The longest serving Democrat in the House, is now no longer the Democratic leader of the Committee for which he has been the longest serving Democratic member since 1981. Since Representative Dingell has been removed in favor of another extreme environmentalist, one can only imagine how soon the automakers have higher café standards to deal with and individual state requirements.
Detroit should give a big thank you to Speaker Pelosi, since she is the driving force behind all the strings attached to any Detroit bailout. The Detroit area and the state of Michigan voted Democratic overwhelmingly this past November and now they get to deal with those results – the last one in Detroit can turn off the lights…