Stupak supports bridge loans for automakers; House-passed bill now awaits Senate action

WASHINGTON – U.S. Congressman Bart Stupak (D-Menominee) voted to provide $14 billion in bridge loans for the Big 3 domestic automakers to help them weather the current credit crunch and financial crisis. H.R. 7321, the Auto Industry Financing and Restructuring Act, passed the U.S. House of Representatives on Dec. 10 by a vote of 237-170 after more than five weeks of negotiations between Congress, the White House, auto executives and labor leaders.

"These loans are critical for the survival of our domestic automakers, our entire manufacturing sector and the American middle class," Stupak said. "The bill passed today not only provides immediate loans for the Big 3, but also requires a commitment on the part of auto industry executives, employees, labor unions, dealers, suppliers, creditors and shareholders to participate in the restructuring efforts that will ensure the long-term viability of an industry that helped create this nation’s middle class."

In the 1st Congressional District, the dramatic drop in demand for new cars and trucks is already taking a toll on the steel industry and parts suppliers. Reduced demand for iron ore to produce steel for the automakers has led to the layoff of 350 workers at Cliffs Natural Resources’ Tilden and Empire mines in Marquette County. The closure of the Dura Automotive Systems plant in Antrim County, layoffs at Lexamar in Boyne City, Northern Tool in Mio, H and H Tube in Cheboygan and more than a dozen other suppliers to the automakers across northern Michigan are the result of the current economic crisis.

"These bridge loans will help mitigate the loss of auto-related jobs in the 1st District," Stupak said. "It is my hope that, as the automakers implement restructuring plans and the economy improves, these loans will have laid the groundwork for the recall of laid-off workers and the creation of new jobs."

One in 10 American jobs are linked to the auto industry, with Chrysler, Ford and General Motors supporting about five million American jobs. More than one million American workers and retirees are directly employed or supported by the major automakers, with two million Americans receiving health care benefits through the auto industry. An estimated three million jobs would be lost in the first year if the American automakers collapsed -- nearly three times the jobs lost nationwide this year.

The Ann Arbor-based Center for Automotive Research estimates that inaction by Congress would cost the American taxpayers more than the $15 billion bridge loans. The loss of an estimated 2.5 million jobs over the next year from the collapse of the domestic auto industry would cost government at all levels $50 billion next year and $108 billion over the next three years.

"Doing nothing is not an option," Stupak said. "We cannot sit back and witness the collapse of an iconic American industry that has helped drive the American economy through good times and bad, particularly while the Treasury Department continues to handout hundreds of billions of dollars to the financial sector. The bill passed today is a loan, not a bailout. It includes strong protections for the taxpayers, and I have every confidence the loans will be paid back. The result of these bridge loans will be a stronger auto industry and a stronger American economy."

H.R. 7321 calls for the creation of an "auto czar" to administer the loan program. Taxpayers will receive stock or other financial stake in the companies receiving the loans. The bill prohibits golden parachutes for executives and eliminates bonuses for the 25 highest paid employees at the companies receiving loans. All other financial obligations and liabilities of companies receiving the loans will be subordinate to the loan, the taxpayers being given first priority for repayment.

The bill passed the House and awaits action in the Senate, where it could be considered as early as Thursday, Dec. 11. The White House has indicated its support for the legislation.

Visit Congressman Stupak’s web site at www.house.gov/stupak.