Panel II of a Hearing of the House Financial Services Committee - Stabilizing the Financial Condition of the American Automobile Industry
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REP. EMANUEL CLEAVER (D-MO): Thank you, Mr. Chairman. I have six questions, I think we can get through them if you cooperate with me, with very concise answers. The first one, why 25 billion (dollars)? I mean, why not 26 (billion dollars)?
MR. NARDELLI: From our standpoint, as I said earlier, we looked at the balance of this year. We looked at our cash position. We assumed our exit rate this year would be the industry rate next year.
REP. CLEAVER: Okay, thank you. So are we going to divide three into 25 (billion dollars)?
MR. NARDELLI: No we are asking for 7 billion (dollars).
REP. CLEAVER: So we're going to do --
MR. NARDELLI: Chrysler.
REP. CLEAVER: No, no, Chrysler, General Motors, Ford -- 7 billion (dollars) a piece that's 21 (billion dollars).
MR. NARDELLI: No sir, we're asking -- Chrysler is asking for 7 billion (dollars).
REP. CLEAVER: Okay what is General Motors --
MR. WAGONER: We had indicated against the suggested package of 25 (billion dollars) that proportionate to our relative market share would be 10 (billion dollars) to 12 billion (dollars) for GM.
REP. CLEAVER: Ford? Sir?
MR. MULALLY: It would be the rest based on the market share calculation.
REP. CLEAVER: (Laughs.) This is a -- I mean we're just spending $25 billion loosely. I mean this is loosey-goosey -- whatever's left, I'll take. Okay, thank you.
Now, secondly, the question that is somewhat troublesome is what Jerry York, former GM board member said this morning on one of the news talk shows, he says that Ford has more money in their coffers as a result of an investment in the market they made a few years ago, than GM or Chrysler. And he goes on to say that GM turned down a deal with Nissan a few years ago that would've arguably given them a cash flow that would not have made it necessary for you to be here. And he said Chrysler seems to be in difficulty whether they get money in a rescue package or not. Any of you have a short response to what Mr. York said?
MR. WAGONER: I can speak in the case of GM that it's an inaccurate, completely inaccurate conclusion.
MR. NARDELLI: I can say not in -- relative to his comments Chrysler, I think, has made pretty public that we are looking for alliances, partnerships, opportunities to get further synergies across the auto industry, certainly here in the U.S. or on a global basis. So we are totally open to any recommendations or thoughts that would result in a more efficient, more viable and more productive auto industry, whether it's consolidation in technology or in manufacturing or in purchasing et cetera.
MR. MULALLY: His summary was very accurate. We went to the markets early and aggressively to be able to fund our transformation plan. The progress we've made on the product and on the productivity has gotten us in the position today that I think we can make it through this recession if it doesn't get worse. Or absolutely with our partners in the industry, that if this gets worse we would like to have this vehicle in place so that we can save and be part of the solution of the economy recovery going forth.
REP. CLEAVER: Okay. GMAC receives a part of this money although they are a non-depository institution -- I mean, it's a lending institution. And I was at a dealership two weeks ago and, it's a GM dealership, and the owner told me that GMAC had sent out a letter to all of the dealers telling them not to even send them any potential customers whose credit rating was below 700. Now if we're putting more money into the market to, we're trying thaw a frozen credit market, what in the world is going on if we're putting money into GMAC and they're still not making loans.
MR. WAGONER: Just to be clear, we own 49 percent GMAC so don't have control at this point.
REP. CLEAVER: Okay. But you ought to be really angry with them or some -- I mean, whether you control it or not, I mean, the point is they're not making loans.
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