We are live blogging the Dec 5th auto hearing here .
We are live blogging panel 2 (Detroit 3 on the witness stand) right now!!
Invesguard will bring you live updates from the Senate Hearing as it happens...
Keep checking back for frequent updates..
The hearing has just started... Senator Dodd thanking outgoing senators....
Senator Dodd's opening statements:
According to the Senator, he asked Mr Bernancke if there was anything preventing the Fed from providing financing to the automobile industry. The treasury and Fed representatives were invited to the hearing but declined. He believes that failure of the Auto Industry would have ramifications far beyond manufacturing and pensions" and would "worsen the crisis".
Most of his opening statement was spent on explaining the ramifications of the failure of th auto industry.
Bottomline, he supports bankrolling the auto industry. He believes that conditions levied on Auto Industry companies for getting financing should also be levied on companies from the Financial Industry who have participated in TARP.
Senator Shelby opening statements:
He intends to oppose the bailout of the Auto Industry...
The "price tag" for the bailout increased from $25 billion to $34 billion 2 weeks. What changed?
Acting Comptroller General of Government Accountability Office (GAO)
Before financing is provided, there is a need to understand if auto industry crisis is national economic crisis, if there is an exit strategy, companies are willing to make concessions , the federal government must be put in a first lien holder position, there should be controls over management, clear and consistent federal controls and monitoring over disbursement and use of funds.
There should be a rigorous board to oversee the administration of monies. This board has to be established if the decision is made to go forward with financing.
Financing could be provided through short term and long term loans in view of the urgency of the crisis.
He believes that TARP legislation is broad enough to provide such financing. But Board oversight should be included because current TARP legislation does not include critical management oversight.
UPDATE: Mr. Dodaro insists that the Congress should receive collateral for the loan indicating that he may not be trusting the assumptions on which the Auto Industry has based its potential repayment schedule.
Suggests providing financing to financial companies to provide funds to Auto companies. Such financing could be through equity participation by financial institutions in such auto companies. In such a way, financial companies will ensure the success of the auto companies and provide oversight of the disbursement of the funds as well.
Does not trust the Auto Industry enough to give them the money. Needs greater oversight and cooperation from various stakeholders for the Auto Industry bailout work.
General Counsel to the GAO
He is providing inputs from the Chrysler government financing (from a few years back) to provide similar controlling tools here.
Points out that most of these questions surrounding accountability and transparency were never posed to banks that participated in TARP. I guess the Congress is a quick learner :-) Better late than never!!
1 year ago