CNBC "CNBC Reports" - Transcript

Interview

MR. KUDLOW: The battle of bailout nation -- are we headed for bankruptcy light? We welcome two members of the House Financial Services Committee who sat through today's Detroit auto bailout hearing. We have New York Republican Peter King, Massachusetts Democrat Stephen Lynch.

Hello, gentlemen.

There's a bit of breaking news I want to toss to you.

Mr. Lynch, you can take a whack at it. Speaker Pelosi, who was engaged in some discussions with Josh Bolten, apparently, the White House chief of staff, apparently, we are told, Ms. Pelosi no longer insists that any bailout money come from the Treasury TARP program, by which, I think, Mr. Lynch, that means she would accept the fuel- efficiency money, at least as a stopgap. I don't know if you can help us on this report or not.

REP. LYNCH: No. I think that's a good guess. But again, it's a guess. I would say that's probably right, but I can't confirm that. There were two possibilities there, Section 168 or, as you mentioned, the TARP program. And if the TARP is ruled out, then I think all that's left is the technical money that had gone in through the energy bill. So that's probably a good guess, but I don't know that for a fact, Larry.

MR. KUDLOW: Well, Mr. Lynch, are you yourself okay with the so- called technical money through the energy bill?

REP. LYNCH: It's out the door already. I voted against the $700 billion bailout, but that money had already been expended. And whether they take it as loans for capital improvements or a loan for operational improvements, you know, it really doesn't matter to me.

Obviously, I would like to see them survive through a period of difficulty. We do need a domestic auto industry here in this country. It may be the Big Two, not the Big Three, but that remains to be seen.

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MR. KUDLOW: Mr. Lynch, why don't you relax the fuel standards, the CAFE fuel standards? There are a lot of people saying it's forcing Detroit to make small cars that are very expensive and highly unprofitable. And some people say at least if you gave them worldwide CAFE fuel standards it would take the pressure off them. Why don't you give them a break on that?

REP. LYNCH: Well, I think we need to consider everything. I'm not sure if that's what they're pointing to as a reason for their difficulties right now. But they are saying there should be uniform standards and that, you know, that would be more competitive for them. I suppose they have a point there. But you know, I think they've got more immediate problems that need to be addressed right away.

I agree with Peter that the bankruptcy process, I think, is very slow. These bankruptcy courts are not known for their speed. And I think it would take a long time. We had one bankruptcy expert there today saying it might be three to four years before some of these big companies come out of bankruptcy. And that will be too late, I'm afraid.

MR. KUDLOW: What's going to happen here, gentlemen? I want to get both of you to weigh in. How much? What's the package going to be?

Mr. Lynch, you first.

REP. LYNCH: Well, it would be guessing on my part. I know that they're asking 34 billion (dollars) today. They were asking for 25 billion (dollars) last week. So it should be 45 billion (dollars) by next week, I imagine.

I think that if it is the money allocated in the energy piece, I think the maximum is 25 billion (dollars) in there to convert to operational uses. So I could see that they would get all of that. I don't know if the votes are there in the Senate, but I think that would be the amount we're talking about.

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