CNBC "CNBC Reports" - Transcript

Interview

MR. MATHISEN: So how will the automaker's plans be received in Washington this week? Representative Spencer Bachus is a Republican from Alabama. He's the ranking member of the House Committee on Financial Services. And Representative Gregory Meeks is a Democrat from New York, also a member of the House Financial Services Committee.

Welcome to you both.

Representative Meeks, let me begin, and I want to get your reaction.

And also yours, Mr. Bachus.

The speaker earlier today said as follows, "I believe that an intervention will happen, either legislatively or from the administration. I think it's pretty clear," she said, "bankruptcy is not an option.

Mr. Meeks, do you agree with that?

REP. MEEKS: Yeah. I think that there's a lot on the line. When you talk about 5 million jobs possibly lost and when you think about, as your figures showed, how much, because of the financial crisis, each of the Big Three have had their own finance companies and the lack of the availability of credit, and so therefore, their sales are down, most of them, over 50 percent, that there's something has to be done. The question is, how do we then hold them accountable to make sure that once we spend or loan the $25 billion that their companies will continue to be in existence and they've changed the way that they do business so that there's a long-term plan of stability? And I think that's that we need to look at and look at very closely.

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MR. COHEN: Let's get Congressman Meeks in here.

I mean, did they meet that burden of proof at all, as far as you're concerned, having seen what you've seen? Or is this just a little too little, too late?

REP. MEEKS: No. I think that we've got to look at it. And I think that we've learned a lesson from what we did do with the financial industry. You know what? First, Paulson came, when you talk about the financial sector, with a three-page document saying, give me $700 billion and let me do with it as I please. And then we came back, and there was a negotiation going back and forth. And finally, we had a document where we all thought that the money was going to be utilized to purchase the toxic assets.

And then, out of the blue, Paulson decides that he's not going to do that, it's going to be direct investment.

Well, I think that what we're doing here is trying to set up, with other experts, et cetera, to see that -- and I think Spencer's right -- that the executives get it and there is a fundamental change on how they're doing business. And we need to look at that.

But at the same token, you know, I am concerned that, you know, no one knows what happens when you go into bankruptcy if sales continue to fall. Because I believe that it will be difficult for them to sell cars in bankruptcy because of the unsurety, and then if they never get out of it, that we could then be hemorrhaging 5 million jobs and three American companies. But they do have to show a plan where they're going to be more competitive with some of the other car companies. And some of it does have to do with the legacy contracts that is holding them back from actively competing with some of the foreign companies.

MS. GALLAGHER: Well, I think that there's a good point there. That, you know, the point about the banks is actually -- it's hard to argue that, you know, 25 billion (dollars) for the car companies, when we've given the banks 350 billion (dollars), when they also knowingly loaded up on risk and that was the whole problem. I mean, you know, you can say that the car industry is to blame as well. But you know, the figures are so different.

It's interesting, though. GM's plan, I mean, some people are saying that actually it's looking like an out-of-court bankruptcy already. They're talking about shedding vehicles, selling some assets, restructuring their debt. You know, I mean, they are taking steps to do that. But at the same time, they're also blaming a lot of the things on things like consumers won't buy cars if the company goes bankrupt and, you know, that a lot of this is the credit tightening. So I think they are deflecting that they really kind of mismanaged the problem themselves. I think the whole sector is doing that. Would you agree?

REP. MEEKS: Yeah. I don't necessarily disagree with that. I think that that's what we're looking for, though, that they've got to change the way that they have been doing business.

And they've got to change it so that they can exist 5, 10, 15 and 20 years from now.

And you know, what we're doing with the auto industry, this is more of a loan. And I think that what we're trying to do is to make sure that as we loan them the people's money that we get a better grip on how we are watching over that money so that if in fact they're making money again, the people get their money back.

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MR. MATHISEN: Congressman Meeks, quick thought. Do you have any reaction to the idea that they're driving to D.C. this time as opposed to flying charters?

REP. MEEKS: I agree with Spencer. I mean, it's good media play. I mean, they should have just thought about the public relations aspect of it, you know, by doing that, that someone's going to bring that question up. But I am more concerned with a plan that's going to make a difference on how they're making cars and making them more competitive so that we are really utilizing the great ingenuity of American thought. And I think that's where we need to go. That's where the focus has got to be. Sure, it's better for them to drive because of the PR portion of it.

MR. MATHISEN: Congressman Meeks, thank you very much.

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