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Senator pulls a Corker

by David Zatz on

U.S. Senator Bob Corker from Tennessee (which just gave Volkswagen enough money to agree to build a $1 billion car factory in the state) declared that General Motors was 98% certain to go into bankruptcy after getting Federal loans, that the United States could not possibly support three car companies, and that Cerberus would not invest a single additional dollar into Chrysler in a long, rambling rant. He also declared that his state’s citizens could not understand how automakers could bring in such huge salaries and lavish benefits. (Labor is, according to Chrysler figures, less than 10% of total costs – including all management and professional salaries and benefits).  

As a U.S. Senator, Republican Bob Corker has a lavish pension, fully funded health insurance, and a salary of over $160,000 per year with complete job security for six-year intervals.

Corker claimed that Chrysler had not invested in future products or technology, ignoring the upcoming Phoenix engines, Grand Cherokee, mid-sized cars, small cars, and new diesel engine.

Corker hammered on Chrysler, saying, “There’s no future for the company as a stand-alone”  and demanding that Chrysler be acquired by GM or Ford before asking for money. 

Chrysler’s plans for Congress noted 24 major product launches by 2012 including electric vehicles.

Corker spent some time discussing how GM would be able to demand that lenders take only 20% of their loans back if they went bankrupt, whereas if they had government loans, they would have to pay back at least 30% of their loans in bankruptcy. Critics noted that the loans GM defaults on would almost certainly be covered by the U.S. government’s bank welfare plan, which means that taxpayers would be paying the difference.

Senator Robert Bennett, Utah Republican and management consultant, also said that Chrysler had to merge, calling it a “shotgun wedding” in his folksy way. (Senator Bennett recently demanded a hold on a “plain language” law, a similar version of which passed the House 376 to 1).   Bennett insisted that the government should fund financial institutions instead of automakers, to “create marketplace pressures” to loan money to them. 

The Senator noted that the Energy Department had rejected two applications for loans to make energy efficient cars, saying they were incomplete. 

The government has spent around $2 trillion on attempts to loosen credit by buying securities, buying equity in banks, making massive ultra-low-interest loans, acquiring mortgage agencies, and acquiring AIG. The efforts have so far been largely unsuccessful. The government has not yet asked a single person or company in the financial industry to take a lower salary, give up benefits, void their pensions, or declare bankruptcy.

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