Introduction of Auto Industry Emergency Bridge Loan Act

Mr. President, I am pleased to introduce with my colleagues the Auto Industry Emergency Bridge Loan Act.

This legislation is the product of a bipartisan effort to provide bridge loans of up to $25 billion to the auto industry. Auto industries around the world, including China and Europe, are requesting loans from their governments because of the dramatic decline of the global economy and the drastic reduction in car purchases and the availability of credit. Our proposition is not only bipartisan. It is a hybrid proposal combining provisions from many sources.

We incorporate Leader Reid’s provisions on strong taxpayer protections, including stock warrants for the government, provisions restricting executive compensation, including bonuses and golden parachutes, and provisions requiring long-term plans for financial viability. Suppliers are also made eligible for the loans.

The language of Chairman Barney Frank, of the House Financial Services Committee, was heavily utilized including retention of Section 136’s environmental standards, such as 25% improvement in fuel economy and Tier II emissions standards. His oversight board membership approach is also included.

The White House opposed the use of any of the $700 billion, already-appropriated stabilization fund, and the Majority Leader said yesterday that there were not enough votes in the Senate to pass an amendment using those funds. We cannot allow the issue of which source of already appropriated funds will be used for the essential purpose of preventing the economy from sliding into a depression, which is a real possibility if one or more of the domestic auto companies goes under, given the impact of the auto industry on millions of jobs, on suppliers that are in most or our states and on all of our communities which have Big 3 auto dealers.

So we agreed that the only alternative which can prevent those disastrous results is for the funding stream for the loans to come from the so-called Section 136 appropriation that we provided earlier this year in the consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009. However, the structure of Section 136 is preserved in permanent law for the balance of its appropriation not utilized for loans, and the environmental standards of section 136, including strengthened fuel economy and emissions standards, are preserved. Also, loan repayments will be used to replenish Section 136, along with any proceeds from the sale of company stock owned by the government.

Under our proposal, this emergency bridge loan program would be administered by the Secretary of Commerce.

The time for Congress to act on this pressing issue is growing short. People in communities across this country are anxiously watching to see what we are going to do. They are sick with worry. Not acting on a solution will provoke anger and frustration in hundreds of communities which supply components or have auto dealers. This is a Main Street issue – a direct jobs issue for millions of families.

I know there is frustration with the past actions of the U.S. auto companies. Some blame them for the quality problems of the 1970’s, or for paying their executives and their workers too much, or for not moving aggressively enough to produce advanced technology, fuel efficient cars. But we can’t throw millions of jobs, a vital segment of our industrial base and our economy overboard just because of this frustration.

President Bush, President-elect Obama, and the leadership and probably a majority of the Congress all agree that we needed to provide bridge loans to support the U.S. auto industry, and I am pleased that the leadership of the Congress has said that we will address this issue beginning December 8.

The stakes for our future economic security and well-being are enormous. One way or another, we must provide the bridge loans for the domestic auto industry – for the sake of millions of workers and their future and to keep our economy from being pushed into a depression.

I want to thank the cosponsors of this legislation, Senator Bond, Senator Stabenow, Senator Voinovich, Senator Brown, Senator Specter and Senator Casey for their assistance in preparing this bipartisan legislation, and I urge my colleagues to join us in supporting it.

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