The "Big 3" U.S. automakers returned to Capitol Hill on Friday for their second round of congressional testimony, asking lawmakers for $34 billion in loans to prop up the American auto industry.
As was the case the previous day, when auto executives appeared before a Senate panel, members of the House Financial Services Committee seemed willing to consider extending some sort of help to the beleaguered auto sector, though they remained skeptical about the leadership the auto executives have shown so far.
The general feeling among members of Congress seems to be that the automakers have made serious mistakes over the last few years - not preparing for lean times and relying too heavily on sales of gas-guzzling SUVs, among other things - but that the impact of a failure in the industry might be too much for the economy to bear.
Committee Chairman Barney Frank, D.-Mass., likened the situation to a teacher who punishes the whole class if one student misbehaves. He said that he did not want to punish the whole country for the misbehavior of the auto executives.
Paul Kanjorski, D.-Penn., called flirting with allowing the automakers to fail a "terrible game of chicken," but he said any money that Congress would grant the companies should come with conditions necessary to fund the auto industry for long-term viability.
Donald Manzullo, R.-Ill., characterized the automakers' turnaround plans as "woefully insufficient" and argued that giving money to the automakers does nothing to increase the demand for cars. He urged his fellow lawmakers to consider tax incentives to buy cars.
Since there is nothing in the automakers' plans dealing with demand, Manzullo characterized the proposed turnaround programs as "woefully insufficient."
The criticism of the companies' proposals was echoed by Ginny Brown-Waite, R. Fla., who said the automakers suffered from overcapacity, lack of corporate governance and a lack of foresight, not only from conditions beyond their control, as executives have claimed. She accused the leaders of the companies of having "negligent disregard" for their duties.
The heads of the major automakers - Rick Wagoner of General Motors (GM), Alan Mulally of Ford (F) and Robert Nardelli of privately held Chrysler - repeated their call for funds to prop up the industry, stressing that the money would be used to restructure the industry.
In total, the automakers have asked for $34 billion, with GM and Chrysler saying that they need the money by the end of the year to stay afloat.
Concerns about the job losses that could result from a bankruptcy of one or more of the major automakers - millions of jobs are tied to the auto industry - was made especially acute by the release of employment statistics earlier in the day that showed the biggest number of monthly job losses in over 30 years.
Early Friday, the government released statistics showing that the economy lost 533,000 jobs in November, the worst decline since December of 1974. The report also showed that the unemployment rate jumped to a 15-year high of 6.7 percent.
This is the second time the automakers have come to Congress asking for money. Their first attempt, which took place last month, was rebuffed after lawmakers were not persuaded that the money would be wisely spent.
Congressional leaders asked the auto executives to return this week with more comprehensive plans.
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