Washington – At a hearing of the Senate Banking, Housing and Urban Affairs Committee today, Senator Evan Bayh warned that there could be a significant ripple effect on the American economy if Congress were to allow the Big Three automakers to go into bankruptcy.

While questioning Acting U.S. Comptroller General Gene Dodaro, Bayh said that now is not the time to add additional risk and job loss to a fragile economic system. He cautioned that if Congress fails to extend a bridge loan to Ford, Chrysler and GM to help them persevere through the credit crisis, it could cause massive job loss and broad harm to the American economy.

“Isn't it true that, if we were to allow these companies to go into bankruptcy,
there would be a lot of unanticipated consequences, some of them perhaps profound, and almost all of them certainly negative?” Bayh asked.

Bayh said that doing nothing would be the riskiest course of action for Congress.

“Given the great deal of uncertainty already present in the economy, it suggests to me that this is a time for a more cautious approach, to try to minimize the amount of fragileness, uncertainty, instability in an economy that already has plenty of all of those things,” he said. “If we do nothing, there would be a significant economic impact on a whole lot of middle-class folks who aren't seated anywhere at this [hearing] table today.”

“There will definitely be repercussions,” Dodaro agreed.

Bayh cited the positive precedent of Congress’ loan to Chrysler in 1979, in which taxpayers were repaid ahead of time and made a profit.

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