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-- is a Democrat from New Hampshire congressman thank you very much for coming in appreciate it.
Glad to be here so.
You know you have these problems that are contractual that GM has that is they have to pay out these dealers it's actually against the law.
State law that is for some of these dealerships to be close some of which have not been profitable for months if not years.
Doesn't that take a Chapter Eleven a change.
Well you know what they're really critical thing that we're facing -- That this is about people this is about millions of jobs connected to the auto industry -- any decisions we make.
About whether to give assistance through the federal government or.
Pursue alternatively a Chapter Eleven.
Bankruptcy filing really have to focus on.
I'd be integrated nature of the auto industry without millions of jobs we can't throw good enough money after bad.
But these industries have got to be brought into the 21 century so the balance is very delicate.
Let's bring in -- was there he is a professor at the University of Chicago and he is -- bankruptcy specialist to specialist in bankruptcy law.
Professor then let's get your perspective on this.
That the opportunity for the nightmare either want it depends on how you look at it it say for example General Motors were to have to file for bankruptcy.
Are the actual fallout effects worse then what they would be if you spent a lot of money bailing out the company.
Well I think the first thing we say is that you bankruptcy is never good -- the question is what are the other options.
Our experience has been with large bankruptcies that in fact we haven't seen collapse of an entire industry let's say win the airlines failed to went through Chapter Eleven we didn't see that in the retailing sector let's say when.
Bloomingdale's failed or Kmart failed.
So the fact of the bankruptcy filing shouldn't bring down the entire industry that the difficulty though is is just figuring out how we're gonna get her way out of this mess and bankruptcy doesn't bring with -- any silver bullet to stop destroy things but it's not gonna solve the problems either.
Congressman the main problem is very simple GM is not selling cars.
You know it's one thing to give them a bailout it's another thing if that bailout is just wasted taxpayer money.
How do you get Americans to buy GM cars if they don't want to.
Well look I agree.
The distinction between a bailout and protecting taxpayers' money is very important we've already seen what happened.
With the troubled assets program right secretary Paulson moved from planning to plan B to play and see.
And is now investing money -- or proposes to win non financial institutions.
So we've got to get this right.
The president elect to use the term deliberate haste and talking about how he's going forward.
We need to act quickly but it's got to be right we need to act deliberately the questions you raise -- good questions.
Well I -- what's the answer -- -- how do you get Americans to buy cars that they don't want to buy -- Well they've.
Look Americans are hurting all over -- we're losing jobs home values are going down the fundamentals of the economy.
Are in a free fall at the moment so.
But one of the strongest reasons to act to help.
In some way the auto makers is to stop the overall freefall in the economy.
Because of the integrated nature of GM -- jobs and that we've got to get our GM.
Back to you that we've got to get GM updated into the 21 century to get people to buy their cars.
Professor -- what's the nightmare scenario that you might envision it if let's take it one at one at a time here if General Motors -- filed for bankruptcy.
What the worst problem would be a free -- bankruptcy this would be a bankruptcy where it files that doesn't have something called debtor in possession financing.
For the bankruptcy Chapter Eleven process to stand a chance of working -- river the only thing bankruptcies gonna do is give people -- time to come to the table and figure out how to solve the problem.
The nightmare scenario is we have a free -- bankruptcy and General Motors files and can't get financing just to.
Meet the -- -- with the pay suppliers.
Most large firms -- go to bankruptcy have this financing already in place and so the big question I worry about is making sure that.
If General -- has to go through restructuring whether it's.
A bailout like we saw in Christ or whether it's Chapter Eleven that we figure out how we get from here to there and public financing if -- set up for the theater -- them.
If you were to pass a bill that would give a lot more money to the auto industry's.
Tell me what do you and your brother and on the democratic side would require these auto companies to do it in a dream world what would you require them to do before you -- hand them.
A single dollar.
Well remember the auto industry has had its head in the sand for the past thirty years while they should've been making fuel efficient cars and leading the world.
Towards the right kinds of car production they haven't been so I've heard a number of suggestions including.
Making sure that the board and top management.
Don't remain in place as they are.
Making sure that they're required to produce fuel efficient cars.
Retooling for the 21 century.
That we are restructuring.
This industry to compete in the world so that once again they're leading the world instead of following.
But -- and I -- congress.
Has had years to make the right decisions.
What makes you think with all due respect to you and your colleagues on Capitol Hill.
That you folks and other bureaucrats can make better business decisions that may have been making in Detroit.
Well I don't think it's up to the bureaucrats to make the business decisions but I do think that if we're gonna win best tax payers money.
We can certainly do as good a job if not a lot better than GM is done to get itself into this situation.
Some things I think are fairly basic we've got to protect taxpayers for any investment we've got to bring these industries into the 21 century.
There's lots of expertise to help us do this.
And it's just got to be one that preserves the millions of jobs that are at stake if we let these industries fail.
OK well then that final word here a professor what do you think is the best solution.
To this nightmare of a problem.
What the best solution is going to be one where a lot of people sit down and people make hard decisions and what I worry about -- of government bureaucrats being involved is that a lot of these hard decision for not very pleasant event.
It would look at Chrysler we saw that half the workforce lost their jobs and so what you need is an environment where you have a bottom up review.
And the people in place are willing to make the tough decisions and and I'm fearful that what we're gonna have -- -- is a band -- that's just gonna put off the day of reckoning that's pretty many decades overdue.
Professor Douglas Baird represented -- Paul -- thank you gentlemen very interesting discussion appreciate you coming in what.
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