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Old 12-31-2008, 09:09 AM   #1
Sterling


 
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A Letter from Barney Frank

I got this response from my rep, Barney Frank today after writing to him asking for his support for the big 3.


Quote:
Dear Mr. Sterling:

Thank you for taking the time to let me know of your views on the
efforts by the federal government to provide financial assistance to
the U.S. automobile industry. Because this issue is of crucial
concern to residents of all the communities I represent in Congress,
my office received -- as in the case of the broader financial rescue
package we adopted earlier this year -- a very large number of
calls, emails, letters and faxes about whether and how to help the
industry. Beyond the communications from people who either
favored or opposed the proposals under consideration in Congress
to help the auto industry, I also received many suggestions for
alternative methods of addressing these issues. The House
Financial Services Committee, which I chair, is the committee with
jurisdiction over financial initiatives of this sort, so these are
matters for which I had considerable responsibility. My staff and
I reviewed all of the recommendations we received, and took them
into account as we worked on auto assistance proposals in
Washington. In order to ensure that everyone who contacted me
receives the fullest possible explanation of my own views and
actions on these matters, and because I think it is the best policy to
give the same information to all constituents who contact me -
whether they agree with me or not -- I have prepared the following
comprehensive response.

Given the current fragile state of the economy, and the prominent
role of the domestic automobile industry in our economy, I believe
that it makes sense to provide financial help to the industry, but
only if the companies agree to some tough conditions. The
automobile industry in total represents some 10% of U.S. jobs and
approximately 4% of our Gross Domestic Product. Beyond the
automobile manufacturing plants, which are located in many states,
the dealers, the auto parts suppliers and the many other companies
that play a role in the industry are distributed across virtually every
corner of our country.

Because of this interconnected nature of the industry, the failure of
any of the "big three" American companies would have a
catastrophic effect on the rest of the industry and the economy in
general. It is possible that if we were in a stronger economic state
it would have made sense to allow one of the companies to go out
of business or declare bankruptcy, though even that would have
caused a serious negative impact on the economy. But, in light of
the current recession, I believe that would be a very serious
mistake.

The domestic automobile industry has clearly made a number of
mistakes, and those mistakes have left them unprepared for the
current economic situation. In particular, their failure to be more
innovative, especially in developing more energy-efficient
vehicles, has put them in a weak competitive situation. But, those
mistakes alone don't account for their current difficulties. All of
the major car companies operating in America, including those
based in foreign countries, have seen their sales drop by 20 - 40
percent in recent months. Along with poor planning on the part of
the U.S. automakers, these drops in sales are attributable to the
credit freeze, and the broader economic problems that have
resulted from the freeze.

These factors lead me to believe that there is strong justification
for providing the companies with financial assistance, provided it
is properly structured and includes tough conditions and taxpayer
protections. Indeed, many foreign governments - including Japan,
Canada, a number of European nations, and the European Union as
a whole - have recently stepped in to provide financial help to their
car companies. In other words, while I agree that the U.S,
carmakers are partly responsible for their own plight, there are
larger forces at work, and the home countries of our foreign
competitors have recognized that and begun to take action. Thus,
if we don't take responsible action of our own to provide some
help, we would essentially be allowing overseas competitors to
have an advantage over our domestic companies by virtue of the
foreign governmental subsidies they are receiving. But, again, it is
vital that we insist on serious restructuring as a condition for
receiving help from the U.S. government.

Like many of my colleagues, I was disappointed when the auto
industry executives first came before us at a Financial Services
Committee hearing on November 19 to request financial help,
without providing much in the way of details on how they would
restructure if we agreed to help them. Following that hearing, the
CEOs worked with their boards, and then returned for a second
hearing at which they were more forthcoming about the difficulties
they faced and their willingness to accept conditions, I thought the
time was right to move forward on a plan to help them. Many of
us believed that the best approach would be to make use of the
funds in the Troubled Asset Recovery Program (TARP), the pool
of funds established by the financial rescue legislation we passed
several months ago, provided strong conditions were attached.

To my disappointment, the Bush Administration was unwilling to
proceed in this fashion, insisting instead that we provide financial
help for the car companies by using separate funds that had
previously been set aside to help them modernize from an energy
efficiency point of view. I disagreed with this idea, both because I
felt it was important to preserve those funds for their original
purpose, and because I am convinced that TARP was well suited to
this type of assistance. When it became clear that the
Administration wouldn't budge on this point, the Speaker agreed to
use the energy efficiency funds, and asked me to move quickly to
draft legislation to accomplish this. Again, my preference would
have been to reserve the funds for their original intended purpose,
but in view of the Administration's insistence and the strong desire
of Democrats to achieve a bipartisan compromise, this was the
approach that we adopted. The Speaker, who is deeply committed
to environmental improvements, also assured us that she would
arrange to restore the energy efficiency funding in the economic
recovery bill that the new Congress will take up when convenes in
January.

As Chairman of the Financial Services Committee I was a lead
negotiator with the Administration, the Senate, the car companies
and the unions in developing the new legislation. Our bill, which
was approved by the House on a mostly party line vote of 237-170,
with 1 voting present, called for making loans and lines of credit of
up to $14 billion to the companies contingent upon solid corporate
restructuring, plans to focus more on energy-efficient vehicles,
financial protections in the form of stock warrants which will mean
that taxpayers would benefit in the future when the companies
return to profitability, and restrictions on executive compensation.
I was also pleased that the United Auto Workers union announced
a series of important financial concessions in advance of the bill
and during negotiations with the Senate. Of particular importance,
the bill made it clear that we could demand a return of the funds if
certain conditions were not met. More specifically, if the Auto
companies that took taxpayer money did not deliver restructuring
plans to the government by March 31, 2009 the loan would be
called or cancelled within 30 days.

Unfortunately, when the bill was considered in the Senate, to my
dismay Senator Corker of Tennessee proposed an amendment
which would have required union workers in U.S. auto plants to
have their pay and compensation cut within a period of less than a
year to a level equal to those employed by foreign owned plants in
Tennessee and elsewhere, without regard to previously agreed
transition plans for older workers. I disagreed with this approach
because the union had already agreed to some compensation
concessions, and because there had been no push for restrictions on
the pay of non-executive employees of financial companies when
we had passed the original economic rescue package in September.
Yet, in this case, with blue collar workers instead of white collar
employees involved, there was an effort to cut their pay and
benefits. I believe this was unfair. In any case, Senator Corker's
amendment was never brought to a vote and died on the
negotiating table. Subsequently, the overall bill was unable to
achieve the 60 votes necessary to stop the filibuster threatened by
Senate Republican Leader Mitch McConnell (R-KY). The final
vote was 52 - 35, with 17 Senators missing the vote, meaning that
the bill was defeated. 10 Republicans voted for cloture (that is,
cutting off the filibuster and moving forward with the vote) and 3
Democrats voted against cloture (not counting Sen. Reid, who
voted against cloture for procedural reasons).

When that happened, the Administration reconsidered its stance,
and as you may know, has now agreed to provide some financial
help to the car companies using TARP funds. I am pleased that,
given the inability of the Senate to pass the bill because of the
Republican opposition in that chamber, the Administration agreed
to take this step. Indeed, in announcing an intention to use the
TARP funds, they are doing what I would have preferred they had
done initially. As you can see from the attached letter, I urged the
Administration to apply the same set of conditions to the TARP
assistance for the auto industry that we had included in the
legislation that was passed by the House. And, while I was pleased
that the Administration did agree to apply most of the conditions, I
was disappointed that they imposed unfair additional provisions,
derived from Senator Corker's amendment, on union workers. As
indicated in the attached statement, I believe these provisions
should be removed, and I will be pushing for that when the new
Administration is in power.

I must also note the other positive result of the Senate's failure to
pass the bill is that the money that had originally been set aside for
energy efficiency is once again preserved for that purpose, and it is
no longer necessary to restore these funds in the economic
recovery package that we will be taking up in the new Congress.

I recognize that many people disagree with the very concept of the
government providing assistance to private businesses, particularly
when they may have played a role in contributing to the economic
problems we are facing. This is particularly the case when there
are a great many people who played no direct role in our economic
difficulties who will be called upon to make contributions - as
taxpayers - to the assistance we provide the automobile industry.
In this connection, I believe it is important for us also to pass a
major economic stimulus package that will bolster the economy
across the board, and also provide some direct assistance to
taxpayers in the form of middle class tax cuts. I am disappointed
that President Bush resisted the idea of a passing a stimulus
package as part of, or at the same time as, the earlier economic
rescue package. I believe very strongly that if we are going to
provide financial help for Wall Street firms, the automobile
industry and to those who are confronting difficulties in meeting
their mortgage payments, we need to also provide help to those
who are active participants in our economy, and have lived within
their means, including those who have diligently paid their
mortgages without any problems.

Even though we were unable to pass a stimulus package at the time
we adopted the earlier economic rescue legislation, I had hoped we
would be able to do so at some point in the months following
passage of that bill. Unfortunately, the President's opposition and
that of Republicans in the Senate made that impossible. It is now
clear that we will have to wait until the Obama Administration is in
office to have a recovery package signed into law. I am pleased to
see that the President-Elect is talking about a package of hundreds
of billions of dollars for this purpose, which he would like to be
able to sign very soon after he takes office in late January. I am
hopeful that such a package can include funds for infrastructure
projects, help for people struggling with education costs, aid to
states, cities and towns, an extension of unemployment benefits
and the expansion of food stamps and other nutrition programs,
and middle class tax cuts. Financial assistance of this kind will in
my view help make our response to the economic crisis more
balanced in terms of its help for low and moderate income
Americans, and will recognize more fully the contributions of
those who did not contribute to our present economic difficulties.

I am optimistic that the new Congress will pass recovery
legislation in consultation with the new administration, and that it
will be available for the new President to sign shortly after he takes
office. And, as work moves forward on the effort to provide
assistance to the domestic automobile industry, I will be doing all I
can to ensure that taxpayers are given appropriate protections.

BARNEY FRANK

BF/JN



For Immediate Release: Contact: Steve
Adamske (202) 225-7141
December 16, 2008 or Heather
Wong (202) 226-3314

Frank Urges Paulson to Adhere to Auto Industry Bridge Financing
Agreement

Washington, DC - House Financial Services Committee
Chairman Barney Frank (D-MA) sent a letter today to Treasury
Secretary Henry Paulson, regarding bridge financing to the U.S.
domestic auto industry. Chairman Frank urged Secretary Paulson
to adopt accountability protections identical to those contained in
H.R. 7321, the auto rescue legislation negotiated with the White
House, and passed last week in the House of Representatives.
"Given the serious mistakes that senior auto industry executives
acknowledge they have made in the past, such safeguards are
absolutely necessary to ensure that taxpayers are protected and that
the retooling of this critical industry proceeds as quickly as
possible," wrote Chairman Frank.

The full text of the letter as follows:

December 16, 2008

The Honorable Henry Paulson
Secretary of the Treasury
Department of the Treasury

Dear Mr. Secretary:

In the absence of final Senate action on legislation to assist
the "Big Three" U.S. automobile manufacturers, I am pleased that
the Administration will provide critical bridge financing for these
companies to help them through their current financial difficulties
and restructure their operations.

As you know, the House-passed auto industry bill
contained strong provisions to protect taxpayers and ensure that the
companies engage in the kind of fundamental restructuring
necessary for their long-run viability and success. One of the bill's
most important safeguards required each company receiving bridge
financing to inform the President's designee of any proposed asset
sale, investment, contract, commitment or other transaction valued
in excess of $100 million, and allowed the designee to prohibit any
such transaction that would be inconsistent with or detrimental to
the long-term viability of the company. This provision, negotiated
with the White House, would provide an important check on
management and make sure that the companies stay sharply
focused on restructuring.

As a condition of aid to this industry, I strongly urge you to
adopt accountability protections identical to those contained in
H.R. 7321. Given the serious mistakes that senior auto industry
executives acknowledge they have made in the past, such
safeguards are absolutely necessary to ensure that taxpayers are
protected and that the retooling of this critical industry proceeds as
quickly as possible. They will also ensure that no stakeholder will
be singled out to make any further commitments until a viable plan
involving all stakeholders has been approved.



Barney Frank

###


For Immediate Release: Contact: Steve
Adamske (202) 225-7141
December 19, 2008 or Heather
Wong (202) 226-3314

Frank Statement on White House Auto Rescue Plan

Washington, DC - House Financial Services Committee
Chairman Barney Frank (D-MA) released the following statement
on the White House auto rescue plan announced today:

"With one significant, regrettable exception, the President's
announcement regarding intervention to prevent the collapse of the
American automobile companies is very welcome. Most of what
he has announced reflects the agreements negotiated between the
White House and the Treasury on the one hand and Congressional
Democrats on the other. And just as Speaker Pelosi showed a
willingness to compromise by agreeing to the President's initial
request that the funding come from the money appropriated for
environmental improvements, President Bush has responded with
an equally helpful compromise by accepting the Democrat's
original preference for using TARP funds, after Senate
Republicans botched our agreement. The President is correct in
rejecting bankruptcy because that would hinder, not help, our
effort to create conditions at which the companies will be viable
going forward and the taxpayer safeguards and compensation
restrictions he has applied are appropriate.

"In addition to the negotiated provisions, the President has
added an unfair assault on working men and women which could
require them to accept a disproportionately large reduction in what
is currently legally owed to them. I am particularly opposed to the
notion that the President borrowed from Senator Corker that could
give foreign auto companies in effect the ability to dictate wages
for all America auto workers. Because these provisions are
unnecessary to achieve our goal and because they were unilaterally
inserted by the President into what was otherwise a negotiated
agreement, I believe that the incoming Administration and the
Congress should take whatever steps are necessary to remove
them.

"All stakeholders including union employees must
negotiate cost reductions but this must be done with equal burden
sharing and with a result that will be much fairer than the
President's approach."


###






In order to ensure that my office is able to record incoming communications
properly, please use the "email Barney Frank" link at the top of the home page
(http://www.house.gov/frank/) underneath my signature if you wish to contact me
again.

Please do not use the "reply" function to respond as this electronic address
does not accept incoming mail.
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Old 12-31-2008, 09:43 AM   #2
WAY2FAST
 
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Barney Frank is an incompetent partisan idiot! He is largely responsible for this mess we are in in the first place!
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Old 12-31-2008, 09:47 AM   #3
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I agree...
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Old 12-31-2008, 10:07 AM   #4
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Saying that Barney Frank is an idiot is an insult to idiots everywhere. Barney Frank would have to aspire to become an idiot!
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Old 12-31-2008, 11:47 AM   #5
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True That!
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Old 12-31-2008, 12:32 PM   #6
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He just needs to get back in the closet
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Hey big man let me hold a dollar
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Old 12-31-2008, 12:38 PM   #7
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Quote:
Originally Posted by WAY2FAST View Post
Barney Frank is an incompetent partisan idiot! He is largely responsible for this mess we are in in the first place!
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