Automakers To Testify Again Before Lawmakers Friday

Washington, D.C. (AHN) - The Big Three will be back on the Hill for a second day of testimony on Friday. They spoke before the Senate Banking Committee on Thursday for the first time after submitting to Congress restructuring plans asking for aid costing $34 billion.

Chrysler chairman and chief executive officer Robert Nardelli, Ford president and CEO Alan Mulally, and General Motors chairman and CEO Richard Wagoner are set to testify before the House Financial Services Committee at 9:30 am ET. United Automobile Workers (UAW) president Ron Gettelfinger will also speak before the panel.

It will be their last chance to make their case for government intervention before lawmakers meet next week for a special session considering legislation giving them a bailout. They faced tough questions during their testimony before the Senate panel on Thursday, with Sen. Richard Shelby (R-AL), the ranking Republican in the committee, belittling their stabilization plans and asking them how they got to Washington for the hearing.

Two weeks ago, the Big Three CEOs used private jets to go to Washington and testify before the same committees. This time, they used fuel-efficient hybrids.

Sen. Chris Dodd (D-CT), chair of the Senate panel, warned on Thursday that inaction would be like "playing Russian roulette with the entire economy."

Chrysler and GM both indicated a willingness to renew merger negotiations if it would help them receive government assistance. All three CEOs have said they would make do with a $1 annual salary in exchange for emergency aid.

Dodd, along with Senate Majority Harry Reid (D-NV), House Speaker Nancy Pelosi (D-CA) and House Financial Services Committee Chairman Barney Frank (D-MA), sent a letter to President George W. Bush the same day of the hearing to ask again that part of the $700 billion financial bailout package, also known as the Troubled Assets Relief Program (TARP), be used to help automakers.

"We have previously urged that $25 billion of the funds... can and should be used for emergency bridge loans for the domestic auto industry. The response from the Treasury to date has been that these funds should only be used to protect the U.S. financial sector. What is becoming clear, however, is that the failure of the Big 3 would indeed have a major direct and negative impact on the financial sector, not just on the economy as a whole," the Democratic leaders said in the letter.

The TARP "was created specifically to stabilize the financial system from threats such as the imminent failure of large sectors of the automobile and related industries," they added.

The four Democrats cited testimony from Acting Comptroller General Gene Dodaro, who heads the Government Accountability Office (GAO), saying that the TARP gives the Treasury and the Federal Reserve the authority to provide assistance to automakers.

The GAO also released a report this week that said the the Bush administration had failed to properly monitor the use of the $700 billion bailout. It added that the administration must establish controls to ensure that financial institutions are complying with the requirements the program, such as limits to executive compensation.

Republicans have expressed little support for using the TARP to help the auto industry. Many have echoed the stance of the White House that the emergency aid should come from the $25 billion loan program at the Energy Department.