Corker criticizes White House bailout of automakers

Tennessee Senator wants 'tough concessions' from GM and Chrysler

Email | Print By Ken Whitehouse

Bob Corker

Sen. Bob Corker today issued a statement criticizing the White House's decision to lend $13.4 billion to General Motors and Chrysler so that they may avoid bankruptcy, while at the same time expressing hope that President-elect Barack Obama will hold the companies' feet to the fire.

"The best solution would have been definite terms, within a finite time period, committed to law, that protected taxpayers," said Corker. "Instead, we have ended up with an agreement open to interpretation, that eliminates the sense of crisis, where taxpayer dollars are expended and we are left to hope that the next administration has the will to enforce the tough concessions necessary to make these companies viable for the long term. Unfortunately, it is clear that stakeholders are already working to undo those tough concessions."

The $13.4 billion will be given through the U.S. Treasury's Troubled Assets Relief Program. Another $4 billion will be added later.

When the original White House plan failed to garner the necessary support from the U.S. Senate last week, Corker offered an alternative proposal that would have imposed specific conditions on the automakers to ensure their viability and competitiveness for the long-term while protecting taxpayer investment.

The Corker plan included three major components, which had to be met by a date certain in 2009:  

• Give existing bondholders 30 cents on the dollar to help reduce their overall debt load.

• Bring wages immediately in line with companies like Honda, Nissan, Toyota and BMW.

• GM owes $23 billion to the United Auto Workers' VEBA (voluntary employees' beneficiary association) account. The union must agree to take half of that payment in GM stock.

"These are the same types of conditions a bankruptcy judge might require but without the stigma and problems that accompany a formal bankruptcy," said Corker. "There's an old joke that if someone says ‘We're from the federal government, and we're here to help,' you should run for the hills. But in this case, I believe a ‘big stick' by the government could have actually brought all parties to the negotiating table and ensured that concessions were made quickly and fairly."