Live Blogging- Automobile Industry Senate Hearing Panel 2.

We are live blogging the Dec 5th auto hearing here .

Refer to the post below for Panel 1 that included questions posed by the Senate to the Comptroller General of Government Accoutability Office (GAO) on the potential bailout of the Auto Industry.

Senator Dodd introducing the second Panel.

Panel 2 consisting of :

1. President of the UAW
2. Chairman CEO of Chrysler
3. CEO-General Motors
4. CEO-Ford
5. President Automotive Retailers Association
6. President COO-Johnson Controls Inc
7 Chief Economist and founder of Moody'seconomics.com

Mr Wagoner Chairman & CEO General Motors:
Ironically, 2008 is GM's centennial year. According to Mr Wagoner, the restructuring plan almost creates a new blueprint for the revival of the company. Believes the plan is achievable. He requests $2 billion in short term loans and $6bil in line of credit. Repayment will begin as early as 2011 and complete by 2020. He wants a federal Oversight Board.

President UAW
opening statement

believes GM and Chrysler could run out of funds. Wants funds to be given to GM, Chrysler and Ford. With labor cost renegotiations, any differences in such costs as compared to international labor costs would be negligible.
Chapter 11 bankruptcy "simply not viable" neither is a pre-packaged bankruptcy.

Mr.Mulally
CEO Ford

Ford has a "laser focus" on the Blue Oval. Reduced investment in Mazda. Matching production to customer demand. Higher focus on smaller cars, fuel efficiency. "We are really focused."
Wants $9 billion in bridge financing may not use it, use this money for aggressive transformation.

Mr Nardelli
CEO Chairman Chrysler
requests $7 billion loan for continue restructuring, manufacturing fuel efficient trucks and cars, begin repayment in 2012. Wants immediate assistance from TARP.

Mr. Fleming
President Automotive Retailers Association
The Auto Industry failure will not just be a Ripple effect but a "Tsunami" (that word again!)
"Consider the human side"

Mr.Wandell
Johnson Controls-President and COO
Largest supplier of automotive batteries to the auto manufacturers.
Vast majority of minority and women owned suppliers can potentially fail .
Over 35% of their suppliers are financially distressed on the verge of bankruptcy.

Mr.Zandi
Chief Economist of Moody's economist.com

Loans requested by Auto Companies is insufficient. They will come back for more.


Q&A

Senator Dodd
1. Would you be willing to accept similar arrangement/model that had been used during Chrysler's 1979 financing.- Yes by all.
2. Cerebrus purchased Chrysler for $7 billion which is exactly the figure that Chrysler is asking the Congress for. What does that indicate?-Nardelli thinks there is no connection.
3. In view of the potential ramping up of mass transit, the big Three believe they can use their current brands to take advantage of this ramp up.
4. Mr Dodd wonders if management continuation at GM is the right way to go- Mr.Wagoner responds "I serve at the pleasure of the board"


Senator Shelby
1. Will the big Three provide full proforma financial statements for the next three years?-Yes from all.

Senator Menendez
1. Do the big Three refute the claim that they will be back for more money soon?
-GM, Ford believe their assumptions are conservative so indirectly they don't believe they will be back.

1.27 p.m.
Senator Crapo:
Congress might be able to provide the Oversight Board with the authority to impose restructuring conditions on all stakeholders.

Big Three
GM needs $4 billion immediately to tide matters over till end January 2009.
Ford just needs approval for funding if they should need it going forward.
Chrysler needs $4billion out of $7billion immediately.

Mr.Schumer
"We want to see the conditions before we give you the money"
Big Three has no leverage, not even threatening to go bankrupt will work. As Mr. Crapo put it, it is like saying "I will cut my nose to spite my face"

1.42p.m.

The President of the UAW is pushing for protecting the domestic industry versus promoting foreign competition.
Senator Schumer asks for an oral committment from all participants that they will abide by any arrangement covenants and make necessary sacrifices to make things work.

1.55 p.m.
Senator Corker to Chrysler "...you can date somebody and hopefully get married soon before you run out of money".
Chrysler Board member (representing the single major investor in Chrysler) to Senator Corker "there is no way that we are willing to make additional investments in the Auto Industry."

2.01 p.m.
Senator Corker, "Less public money (will be used) if the two of you (GM + Chrysler) consolidated"
Q to Mr.Wagoner "Why did you drop the plans to consolidate with Chrysler?"
Mr Wagoner blames liquidity issues for dropping the plan to merge with Chrysler.
Senator Corker- Would the UAW convert obligations into equity in GM?
UAW President- Cannot answer without "expert advice" (Lazard helping UAW.)

2.16 p.m
Senator Casey to Detroit Three- would you be willing to make monthly reporting and making government assistance as the most senior debt?
Yes to the first one
Maybe to the second one(after discussions with current secured creditors)
Senator Tester- Will you be back for more?
Detroit Three- Chrysler- we will get through 2009
Ford- We might be asking for the bridge loan.
GM- We might have to cut costs or require more funding

Big commotion!! Protest, Shouting

Senator Tester- Needs assurance that no dollars given would be used for mergers either domestic or international.

2.50p.m.
Senator Bennett, "everything i have seen...a merger between Chrysler and GM is a good thing"

Mr Wagoner, "We would be willing to look at it (GM+ Chrysler)" (after talking with UAW)

3.20 p.m.
Senator Corker- "We are really here because of GM."
- Senator Corker received an email from Senator Biden who runs the 136 financing plan, their applications have not been rejected but have been sent back for more information.
Senator Corker- "If we put money in GM,"....bondholders would be unwilling to take a haircut. This is a potential problem. They would want more now that GM has money.

Senator Corker to GM ,between a choice of accepting an arrangement from the Government with stipulations to be completed by Mar 31 or filing Chapter 11 bankruptcy, what would GM choose?
GM- Accept financing from government even if it has restrictive stipulations.

3.40 p.m.
Senator Dodd- "Inaction is unacceptable but we are not just going to write a check either". "We are looking at a death sentence."
Sit down over the next 24-48 hours and decide what to do next.

Committee adjourned at 3.42 p.m.