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tv   [untitled]  CSPAN  June 14, 2009 3:00pm-3:30pm EDT

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with the chairman's permission some questions on our debt levels. >> yes, of course. it will be submitted. the last question will come from senator tester from montana. >> thank you. in the congressional oversight board report this morning it it said an additional stress test might be necessary. what are your thoughts on that? >> i have looked at the report -- i have not yet had a chance to look at the report, but i think that i should say two things. the process was designed by the fed. it was a very conservative test. let me cite one example. people have focused on the initial scenarios which were not
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the binding constraint. the loss estimates that the fed used were more conservative. . for its estimate were more conservative than the worst two-year period in the great depression, when unemployment was in the high 20s and 30s for a period of time. knows were the tests that were the constraints, most important part of the test. the idea was a reasonably conservative and the best test of that, in the wake of the conclusion of those results, we've seen a very, very substantial amount of equity substantial amount of equity come o the financial system because it provided a level of clarity and exposure. i think that's a good test. markets don't get everything right. and we're still going through a deep recession and we're at the early stage of repair and recovery. and risks ahead.
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i think it's helped improving confidence in the system. >> the administration you've referenced several times is going to be sending out a plan to congress on modernization of regulation of our financial markets. will there be a recommendation for freddie mac and fannie mae? >> the future of the gses, including fannie and freddie is an important challenge for us, but we're not going to recommend in our initial proposals for reform precisely what we think the future of those should be. we're going to begin a process of consulting with the congress and a broad session of housing experts on what we think the recommendations are. we'll defer recommendations on those things for a bit longer. >> okay. can you give me a time frame that you're looking at?
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>> i can't yet but we probably will next week when we lay it out. it's just a little early. given the scale of the stuff we're trying to take on. we want to do this carefully. >> no problem. thank you. >> mr. secretary, thank you for your time here today. we're going to allow you to leave, of course and go about your business of saving the american economy or lunch, whatever is on your schedule. but we thank you very much for being here. we'll send you some questions that you might'?'?a >> congress is expected to work on a number of measures next
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week, including a supplemental bill of more than $100 billion that includes funding for the wars in iraq and afghanistan. the house could vote on that by tuesday. later in the week, house plans to spend -- take a spending for the justice department. you can see the house live on c- span. in the senate, a key procedural vote is set for tuesday on a measure aimed at post -- at boosting foreign tourism to the u.s. several committees will start to mark up their versions of health care, with congressional republicans scheduled to unveil their plan. the president hopes to sign a bill by october. it said return on monday and you can watch the senate live on c- span2. >> there is still time to get your copy of c-span's 2009 congressional directory, with information on house and senate members, the cabinet, supreme court justices, and the nation's governors.
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it is $16.95. online at >> this week, prime minister gordon brown discusses his proposal for reform of the british parliament in the wake of misuse of expense accounts by some numbers. the prime minister talks about housing, including mortgage loans and funding for new construction and the government's policy on job retention. that's "prime minister's questions" tonight at 9:00 eastern on c-span. >> how is c-span funded? >> i have no clue. >> maybe government grants. >> donations. >> advertising for products. >> public money, i'm sure. >> my taxes. >> how is c-span funded? 30 years ago, america's cable companies created c-span as a public service, a private
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business initiative, no government mandate, no government money. >> now, the president of chrysler and the ceo of general motors. friday on capitol hill, they took questions on plans to close thousands of dealerships as part of a government-mandated restructuring process. we begin with questions from the subcommittee chair. dealerships that have been chosen to go forward, in other words, not be closed, are being told that they should resign from positions of the national auto dealers association, an ada and from positions on state auto dealer associations because of nadh support of legislation to reinstate straight state franchise agreements as the hr 2473. soap rdw mr. henderson or mr. press aware of any cause made on behalf of gm or chrysler to tell people not to be on these boards, state boards?
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>> mr. chairman, i'm not aware of any bills. >> not only am i not aware of them, if anybody in my company is doing i would like to reprimand them or perhaps let them go. >> , will you commit, mr. press and mr. henderson, will you commit to sending out a letter, a correspondent, a message to yo have information i would -- >> here's the e-mail from one of the. >> if you have such an e-mail, why don't you give it to one of the members so they can ask more specifically on the.
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mr. henderson. >> mr. chairman, i will put that in writing. >> so i take mr. press and mr. henderson you will put that in writing for us. thanks. let me ask this. you said under a review and fortify dealers have that decision reversed. so you didn't have an appeal process until you testified before the senate, right? >> no, sir. we had planned to have an appeal process. >> does dealers that were close when they were given their notice, they were closing, they did not receive a way to appeal. you announced that wednesday and thursday, the process was made, e-mail to everybody and they had until monday to submit their documents on appealing, right? spirit yes, they needed to submitted document.
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>> does chrysler have any appeal process for any dealers that were closed? >> no, sir. >> so, if i may, mr. press, then the dealers you do closer could have been some mistakes made? >> our situation i think it's different than general motors, and therefore the conditions are not really -- would be saved under favorable for having an appeal process. >> because of the short timeframe lacks spirit no, not the short timeframe. the reason is and general motors, i believe and i'm not totally aware, i think they have a term agreement which is not being renewed and there's a process to go through for nonrenewal. our situation is quite different from a standpoint that our company went bankrupt. a new company was formed. a different dealer body forward. and strategically, that dealer body that was taken forward was based on criteria not performance oriented but strategic performance criteria with regard to single line
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versus tri- branding and many other aspects that really, for example, locations, or even the population, demographic projections. >> but the single line and tribunal, that's not the dealers all. that's chrysler's fall. i mean, if you have to many, the seats, the grill and the design, that's not their fault. naturally chrysler's fault so what are they being punished? >> great question. i understand why you asked that and i understand the passion. >> i drive an oldsmobile. they get away with it. the last one here. on nursing along, i've pretty close to 200,000 on it and i don't want to leave it, but at least i've got other options. but i'm mad that they closed oldsmobile. >> yes, sir. i understand the double branding. >> i've been with the company a short time. i came from toyota for 37 years, and i think everybody understands the difficulties
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that our company has had with regard to integrity a product, quality and appeal. and asking why that is, it isn't because people don't want to build good cars and trucks. there are insufficient resources available to do the engineering and develop necessary to build winning formula vehicles. in our case it isn't just wheel covers and grills. at about 250 to three going dollars per sister vehicle. and that investment doesn't return any incremental sales and it requires that we advertised the two cars against each other, and it's one of the most important reasons why the company went bankrupt is that we kept taking this problem down the road instead of addressing it, which is what we get. >> my time is up and i'm sure -- but that's your decision. the dealers, even the dealers who survived, it's not their problem that we have a sister vehicle as you call. that's really chryslers problem and the new chrysler has to address the. to drop one like you did on my oldsmobile. drop on. >> we did it and that saved them
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money. that's 555 of the dealers that were discontinued were selling not rebrand, but one. and that was the necessary part of his. it wasn't a desire. it wasn't a plan, but 555 of these dealers had only one brand will not have viable products coming unless all three brands are under one roof that dealer body isn't going to be viable. >> my time is up your every torp would be why not allow those one brand dealers sell all three of your vehicle and keep them open. >> because our volume has gone from over 2 million a year, 700,000. and the only way our dealers will ever survive, and i think these dealers all really understand that, is to have all three brands under one roof or they can put together the synergy, the total customer base and the fixed cost will be covered. that something that everybody wants. we have known that for 10 years. >> then let them do it. >> thank you, mr. chairman. mr. henderson, question for you. who is the purchaser of gm?
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>> the purchaser is general motors sir, will be 6868%, the u.s. government, 17.5% of the shares will be held by a trust and then the remaining approximately 10% will be held by the unsecured claim it's a general motors. >> so the vehicle acquisition holdings is really dominated by the u.s. treasury. >> they will be the primary shareholders to sell in your filing on the bankruptcy court, when you say on page 40, because there are now far more dealerships than the company's market share can support, including in some cases multiple dealers in a single contracting community and dealerships that have become poorly situated as riddles of changing demographics, the purchaser is not willing to continue all dealerships. that purchaser you've done enough is the u.s. treasury. >> yes, the purchaser is the
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largest shareholder is the u.s. treasury. >> and it goes on to say here in your comments to the court, among the dealerships that purchaser is not willing to continue, for example, are those approximately 400 dealers who sell fewer than 50 cars per yea and those approximately 250 dealers who sell fewer than 100 cars per year, approximately 630 other dealerships are not being continued because they are dealers who in whole or substantial parts of brands that are being discontinued. so the question i have is we have been trying to get to the bottom of who is dictating how many dealerships are allowed to go forward for general motors. you told me your under oath that it's the purchaser, i mean that's what you testified in the bankruptcy court, that it was the purchaser who made that decision. and that purchaser is the u.s. treasury. so doesn't that lead us back to the auto task force? making the decision that you're now having to implement. >> the a la mode under the
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automobile passport as we have gone through this process, rightsizing are dealer body. they said if they are going to buy the company they want to have a right sized dealer body. they asked the management to develop a strategy to accomplish a world class correctly sized dealer body. they were not willing to take on our dealer body as it stood, sir. >> okay. but i thought i read that some of you had said they didn't have anything to do with setting the dealer levels. >> they did not tell us a number. >> but yet in your testimony aã the purchaser asked us to develop a strategy to have a
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world-class dealer body. one of the issues we had was of approximately four hundred dealerships sold less than 50 cars for year. >> you are telling me the task force did not tell you these dealerships that sell fewer than 50 cars per year had to go? dealer body properly sized and address what they considereconsider to be considered concerned in their march 30 findings on our viability plan. >> on page five of your testimony, you said and i quote we have not terminated any dealers. do you believe that? >> yes. can i explain? >> please. >> what we have done, we have offered dealers who will not continue with this on the wind downgrades. that term is to provide a period of time in which to wind down their, allow them to purchase parts, perform warranty service, and over time they would no longer, we would not renew their contract and they would no
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longer be with us. >> okay. and beginning this fall they can't buy the 2010 model year cars and you. >> they will not be able to purchase new vehicles. >> it sounds more like you have diagnosed them with terminal cancer, just not going to take about. mr. thomas, do you feel terminated? >> very much so do you want to bring up your microphone up close? smack i feel terminated. >> why do you feel terminated? because i don't have an opportunity to be a full-fledged general motors dealer anymore. can order new cars. i can't return parts. i'm partially in the game but i'm not really in the game. >> calabaza gemma next to you? >> do you feel terminated? >> absolutely. >> why? >> same reasons that mr. thomas said. marketplace where i do business
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has viewed us as going out of business. the precedent to our dealership, tv stations have been to our dealership. my employees are extremely worried, extremely nervous. it's just like beige. >> could have been a different way -- i think you mentioned that you've had sort of standing offers from people to buy your dealership over the years. >> there have been people approaching. i'm sure mr. thomas has had people. anybody who has a good viable business. >> could there have been a different strategy or what if you weren't meeting the goals that general motors set for you, you could've been given time to sell your dealership? did they give you an opportunity to change up what it was? >> no, sir. >> and when they have evaluated you in the past of the adversary if you don't do these seven things, next reauthorization were not going to be there for you? >> no, sir, they didn't. and outside of bankruptcy they couldn't say that. that's why they wouldn't.
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>> my time is expired. thank you. >> thank you to mr. dingell, for questions, please. >> we have a very difficult business here. we have to decide how we are going to protect the rights of the dealers and at the same time see to it that we restructure our american automobile industry so that we save the rest of the dealers, as many other workers as we can, the jobs and the communities that are affected. first of all, to mr. peres and mr. hendrick. do you have written roles for the closure of dealers and for the termination of the dealers? >> yes. >> yes or. >> would you please submit each of them to the committee with such accompanying remarks as you would like to make. now, there is no appeal right for a dealer in the case of chrysler, is that correct? >> that's correct. >> are their appeal rights for
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general motors? >> yes, there are sir. >> would you submit to the committee the precise character of those appeal rights. now, would you tell us, please, mr. hendrix and mr. press, just give us a number, how many of the dealer terminations have been changed by the company under the companies under your appellate procedures or under your categories and standard? >> at this point we have changed 45 decisions. we are not complete without reviews but that's the status as of this morning. >> mr. press. >> we have had no change. >> all right. i have heard of the dealer who was terminated. i won't tell you which company it was. were a big storm had caused the collapse of a bridge, and that
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dealer was essentially shut off from access to his customers. and he was terminated but the company involved has seen fit to reinstate the dealer because they understand the facts. do you have provisions in your termination agreement, mr. henderson and mr. press, that would permit you to address that kind of problem? >> yes, sir. that was a general motors dealer, and when we we look at the facts after the submission we conclude that we were in error in our decision and we reversed that decision. >> mr. mceleney, if the legislation that we are working on nasa's, and it screws up the bankruptcy process and causes
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the collapse of either or both of the companies down the road, we're going to have a rather nasty situation on our hands. part of it is going to be we are going to see all the dealers out of business, all the plants close, all the communities hurt, all the workers and all the suppliers hurt. what do we do about that situation? >> sir, i think with that situation, you know, this is not a normal bankruptcy. as you know this is a government negotiated bankruptcy. the debtor in possession financing beige. >> i understand those things but what are we going to do if that result is occasioned by the situation? >> i don't think that will happen. i think the fact that the government is involved is going to present data mapping. >> is that a statement or a hope? >> part may? >> is that a statement or a hope that it's not going to haven't. >> i guess that's a hope.
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>> i doing in the hope of. >> thank you. >> mr. press, mr. mceleney searched this. none of chryslers submissions to announcement could have been interpreted to put chrysler dealers on notice of the scope of the termination as follows your is that statement true? true? yes or no? >> i'm sorry? >> mr. mceleney state as follows, none of chryslers submissions to the government prior to may 14 announcement could have been interpreted to put chrysler dealers on notice of the scope of the terminations that followed. guesser no, is that true? >> we have had a genesys program, dealer consolidation program in place for more than 10 years, and i think the majority of those dealers had good, long time to prepare for that. >> would you submit for the record your comments that proves that this is not the case.
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now, mr. mceleney, did general motors give adequate warning prior to its may 15 announcement that it would be winding down approximately 1200 dealers, yes or no? >> yes. >> interpress, please describe briefly what chrysler is doing to reclaim and redistribute the inventory of the 789 dealerships it announced would be closed. >> mr. deal, just one second that i now think i understand your question about notification to the dealers versus no in that there was a reason they may not -- the notification to dealers, there was not any additional time given, the primary reason for that was until april 30, at 6:00 at night, before we had to file for bankruptcy we did not plan to. this was not a plan to go for. we had no knowledge of this, and after that may 1 is when we began to develop this program. so there was no notification. >> all right. now, mr. press, if you please. what is chrysler doing to
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reclaim and redistribute the inventory of a 789 dealerships it is announced will be closed? spec we have committed that we would redistribute every single vehicle and every part. >> how about specialized equipment? >> and a specialized equip and. i'm happy to say 100% of the vehicles have already been committed to. they have started moving. we are at 80% on the park and about the same on specialized equipment. we will continue to work until that commitment is fulfilled and all of those burdens are really. >> i want you to listen to this question carefully. how much is it going to cost each dear that is being terminated on each car from the termination? are there any fees associated with that? do they get the full value of the car? is a distressed price? how will that be addressed? >> the price is at the invoice price that they paid less, $350 for inspection, cleaning and
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transportation to the dealer that will be selling the vehic vehicle. >> can general motors give you the same answer? >> indicates a general motors, to the extent the dealer signed to wind down agreement we would expect that moment of court over the next 70 months to sell down their inventory and they would be afforded the same driven as any other general motors deal with respect to retail and support for selling to customers. >> how much cash money are they going to be out in the case of general motors? >> they shouldn't be out any. >> when you take back inventory? parts, vehicles and specialized equipment. >> the case of general motors if the dealer chooses to wind down, we anticipate through that period they will not only sell their cars, they would sell their part by virtue of the fact that they would be able to ride work in service to customers and finally the tools would be amortized. a dealer who terminates, if they just choose to voluntarily terminate by virtue of our
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agreement with gmac, a dealer can return the cars to gmac and we would redistribute the cars with no cost to the dealers. >> thank you. myime has expired. . . why do they have to pay you to take back the vehicles when you have shutdown. why did have to pay $1,500 to shut them down? >> first of all, the company filed bankruptcy. the fact of the matter is, in a bankruptcy, all precedent would be the inventory would be the responsibility of the dealer. if the company their franchise with is no longer in business,
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there was not a provision in possession financing and it could not be provided to buy the cars back. still our challenge was, and it was a good one, without using taxpayer money, to relieve dealers of inventory and do it in a manner where it did not cost the taxpayers, which we did through the redistribution program. that redistribution program was implemented and we distributed 100% of the vehicles. we are happy to say that is complete. >> that to happen very late last night. as of 7:00 last night, we got calls from dealers saying they had cars and would not take them back. >> we have had written notices and it has been in the senate and in the newspaper. we will continue to provide the dealers information and evidence of that. we have redistributed the cars to other dealers. they physically may not have all left the lot because we were not
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able to begin moving them until yesterday when the new company formed. but we are at it and anyone who please has a, give them my name. i would be happy to talk to them. ntioned taxpayers but every one of the dealers are tax payers as well. >> thank you, mr. chairman. there is another hearing going on so i have been shuttling back and forth i also need to alert mr. blankenbeckler there is a play into texas calling my name so i may leave after these questions. i would like to ask mr. press and mr. henderson send, but is there an established set of criteria under the evaluation which dealerships were to be closed and which were to be left open? you have actual criteria in writing how you evaluated dealerships foreclosure or to re


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