end of end of this hearing was it a complete anomaly? or was it referencing symptoms that we should be concerned about? >> well, i think the map, you know -- it clearly is based on i'll assume some, you know, factual locations where people live. i wouldn't -- i think what we're focused on here is people who didn't professionally deal with what, you know, they should have. in other words, they did not have the adequate rest that, you know, a professional would suspect they would. it doesn't mean those people commuting weren't doing it the right way. they were coming in the night before. i don't know. we can't tell from that. >> but isn't that the key? you don't know. >> we don't know, that's correct. >> none of us know. that's the reason why i asked the question. >> and different carriers have different methodologies. i know some of the cargo operations -- they really don't care where you're based. they will actually buy you a hotel room. they expect you to come in the night before and they'll pay for the hotel room. that's a solution. they have looked at that time. they don't want their pilots

fatigued. so that's a solution and again, i want to go back to exactly why we're bringing everybody in. it if this is going on and there are better ways to do it, we need to know about it and we need to know about it now >> and you're bringing them in monday. >> yes, sir. >> you and i talked about that and that makes a lot of sense and we should address the issue rather than ignore the issue. mr. rosenker, you've obviously been looking at this issue. your reaction? >> we have issues about commuting. we want to make sure that both management and the pilots have a responsible outlook on how this can be done in a safe and efficient way. the reality of life is these people are going to live where they wish to live. many of these bases don't exist where they would like to live and some of the bases are in very, very high economic cities where, in fact, it costs a fortune to try to buy a home or

rent an apartment. the business of and the practice of commuting has been around since commercial aviation. pilots are allowed to pretty much get inexpensive if not free transport any time they wish. so we realize this is a fact of life. and what we are trying to strive for is the most safe way we can get there because we can't ignore it. but we've made recommendations to the faa concerning fatigue. fatigue is a very insidious condition and many times people won't know they are fatigued until it's, unfortunately, too late. we're hoping that the faa will be taking our recommendations and incorporating them into some regulations and we believe that if implemented, it will go a long way to reducing the insidious effects of fatigue. >> what portion of the airline flights are by commuter

carriers? >> about 50% of the flights representing about 20% of the passengers. >> okay. 50% of the flights by commuters. do you have data that's accessible with respect to accidents in the last 10 years, commuters versus major carriers? >> i don't have that handy. we could get that if you wish and i could supply that to you. >> the reason i ask the question is my understanding is it's somewhere 7 out of the most recent 9 accidents with commuter carriers. does that sound reasonable to you? >> that may not be including the three accidents that we are investigating right now, which include the hudson river, which include a denver 737 continental. >> right. >> these were not fatal but they were major air carrier, major hull loss and, of course, the air france that we are participating with the french authorities. >> and we should say that we're discussing this through the lens

of a tragedy and understand always that's the case. and the tragedy existed in the cockpit as well. i mean, in some ways i feel bad about talking to two people who flew that airplane who can't represent themselves and yet we're very concerned -- all of us are very concerned about what happened, what could could have been been done differently and make certain that others who board airplanes understand that the things that we can learn from this crash will be implemented. mr. babbitt one final question, you will no doubt appear before this committee many, many times. i understand that when you are asked whether you have sufficient funding at the faa, i believe most witnesses are instructed to support whatever the president's budget request is. the last person i recall who came to the congress -- one of the committee i was on, in fact, said the president's budget request is far inferior and far

short for his agency was fired the next morning publicly in a great show of strength. so i understand you must say that you have all the money you need and yet a couple of the witnesses have suggested that you might well need some additional funding to implement assuming that you have the will and the agency has the will to implement the things that are necessary and to enforce what is necessary to enforce. so we'll talk when you don't have a microphone in front of you. [laughter] >> about those issues. but i do say that when you come back here i'm going to ask the same question after you've had a couple of weeks. have you begun rulemaking on that when the ntsb suggested -- there's no excuse in my judgment for the faa to wait another month to begin a rulemaking to make certain all the records of a pilot are available immediately and now to a potential employer of that pilot. that ought to happen now. and i will ask you the next time you're here whether the rulemaking that started and i hope you will consider that a priority. >> well, if you don't invite me

back for at least a week, the answer will be yes, sir. >> all right. thank you very much. let me thank the four of you for appearing. as i indicated next week we will have a discussion with the airlines and some other witnesses in addition to the airlines. this is, as i said, a serious subject, in many ways as is probably always the case these subjects are most aggressively and often discussed when they are bourne of tragedy and our heart goes out to those who are involved in the tragedy and those who love them and we just hope that through these discussions, we will make progress in protecting others. and i want to end it the way i started this. to say that we have an unbelievable safety record in this country with air travel. but that ought not suggest any of us sit on our laurels. i know enough from having studied this there are a lot of recommendations that are not implemented and i don't want the next airplane tragedy to be one in which we discussed a

recommendation that we knew about but was never implemented. we can do a lot better than that and should. and at least my stewardship of this subcommittee is going to be to push and to push very hard to implement that which we know can save lives. thank you very much for being here. this hearing is adjourned. k you very much for [inaudible conversations] [inaudible conversations]

[inaudible conversations]

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>> every weekend is filled with books and authors on book tv. look for our entire schedule online at booktv.org. >> there's 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. plus, district maps and how to contact committees and caucuses. it's $16.95 online at c-span.org/products or call 1877-onc-span. >> the treasury department's top official overseeing the government's stake in the u.s. auto industry told a senate panel on wednesday that government intervention has saved hundreds of thousands of jobs even if it's been, quote, painful. this senate banking hearing is just over two hours. >> the committee will come to order.

we're here this afternoon for two purposes. the what i would like to recommended and i had chatted briefly with senator shelby is on the executive session nominees that there's going to be a vote sometime, i think, tomorrow morning on the tobacco bill and my recommendation would be during that vote or right after that vote we meet to consider these executive session nominations. i think based on conversations, they should be relatively noncontroversial. i'd invite my colleagues to take a look at them and let me know there is some problem that would require some further discussion and we'll save it for another moment. but if we could do it tomorrow, then it will save us waiting around. yes, bob. >> i wonder if the fha nominee -- i'm just curious about the status. >> which one is this? >> the fha nominee that's not

here. on there and i know it's very important. >> if i can answer that, there's a hud investigation going on, as i understand it, and from staff dealing with the respa in some of the countries. we don't know if he's involved or what. but we're waiting to see what comes out of the investigation. so that's my interest is making sure all nominees are -- i feel like he'll probably be okay. but we want to make sure. so i'm waiting for a little more information before i agree to moving forward. >> i don't know mr. stevens personally. i never met the man but he comes highly recommended, i must say, by people who are knowledgeable, in fact, senator martinez have talked about him.

bob, you and i have talked about him. i have constituents in for my state that is knowledgeable about fha work and know mr. stevens swell and have recommended him highly. senator shelby points out some issues that the committee could not ignore in the midst of this. i've talked to the secretary of hud about the nominee and what steps they might be willing to take to provide some assurances to the committee dealing with respa and other matters. i don't believe forcing this on the committee -- i'd like the consultation advice of my colleagues as well on a matter like this rather just bringing up a matter -- i always like on these matters where we can to have a bipartisan support for a nominee. and particularly there's an outstanding issue. we're all aware of what can happen. it sounds fine but six months, a year from now something pops up and obvious questions, well, you had some idea this might happen. why did you go forward? i'm not sure that should always be the standard but nonetheless that's sort of where we are, bob, on this one. do you have any comments on

this, mel? >> i'd just say i'd talked to the hud secretary and i think he'd gone out of his way to alleviate those. and base on what i know about the case and we're going to do more diligence but we wouldn't have anybody serve on the administration, maybe in any other body -- i mean, these are not to him personally to my knowledge but in any event i appreciate it. i know he does come highly recommended but there may be some issues. i certainly will defer to the chair and ranking member to ensure that there's no problem. but it's a pretty important position that is not in place and he does come very highly recommended. >> senator shelby? >> i would to say again this gentleman might be very well qualified. he might be pristine clean. i hope he is. i've heard good things about him. but i think that we ought to --

where there's a hud investigation involved -- involving one of these companies that he was involved with, we ought to have a clean bill of health from the man before i vote on him. i don't know. you vote at your peril up here. i've been here a few years. >> thank you. >> okay. well, let me also -- i just want to make a couple of observations about the hearing today. because of the rulings on the chrysler bankruptcy at the supreme court last evening, mr. blum one of our witnesses here was enable to have his full testimony ready for us on time yesterday and we'll give you a waiver on that knowing how busy you were. normally we like to get this testimony but understanding the circumstances. however, members are highly -- or rightly concerned that testimony was not delivered here until 11:30 today and our committee has strict rules on this. i know you're aware of that. but i do understand the problems of last evening and as members of the committee understand, general motors corporation filed

for protection under chapter 11. the bankruptcy code on june 1. i have, therefore, understand that mr. bloom may not be able to answers that are the subject of that ongoing litigation and if that's the case a question may be asked and you'll have to respond accordingly mr. bloom and i raised those two issues that have been brought to my attention and i want to welcome our two witnesses as part of the table. i'm going to take a couple of minutes here for an opening statement and turn to senator shelby and we'll get to the hearing. let me say at the outset, what the bottom line for me. is every member here will have a different point of view. getting out of the automobile industry by the united states government yesterday would not be soon enough for me. my hope is whatever else -- whatever we like or dislike about the present configuration, that i want to see us get out of this business as quickly as we can. that's my interest. obviously, there are matters to discuss on how this is all working. but i start any discussion and

debate from that point of view. and again, my colleagues will express their own views in the matter but from my standpoint here it can't be soon enough that matter. so i want to welcome our witnesses both mr. bloom, dr. montgomery to the third in the committee's series of hearings on the state of the automobile industry. today's hearing is unique because for the first time we'll be hearing directly from the administration officials overseeing federal assistance to america's domestic auto industry. failure of any one of detroit's big three poses obviously i believe a grave systemic risk to the economy threatening hundreds of thousands of jobs directly provided by these companies and imperiling more jobs with related industries from suppliers to car dealers, some 20,000 people in my home state of connecticut alone that are directly employed or indirectly by the automobile industry. it is for these reasons that president bush and later president obama martialed the resources of our government, not only to preserve countless american jobs but to help

re-establish a foundation for a viable and competitive domestic auto industry. when general motors and chrysler buckling under colossal liabilities racked up after years of incompetent management over $170 billion in debt for general motors and $55 billion in debt for chrysler, the obama administration auto task force helped develop a plan to recapitalize and overhaul the strategic, financial and organizational structure. the plan is largely been adopted as part of the prepackaged gm and chrysler bankruptcy proposals. i believe that once finalized, they will result in the savings of thousands of american jobs, certainly, that's my hope. and potentially the preservation of a very critical manufacturing sector. nonetheless, manufacturers all across the nation will not be spared. plant shutdowns, dealer closings, mass layoffs. moreover, if approved, the deals that now we know about will continue to raise important questions over unprecedented government involvement in private industry's restructure.

to me these questions can be summed up as follows. how exactly are taxpayer dollars being used to restructure the auto industry? why is the government taking such large ownership stakes in these companies? is the government doing everything it can to protect american jobs. what assistance is being provided to communities devastated by auto plant and dealer closings? and when can we expect the american taxpayer to receive a return on the investments that we've made? before turning to my colleague from alabama, i would like to address what i regard to be a false look over stakeholders. some critics have decried rather the restructuring plan as a win fall to auto workers. they point to an arrangement in which creditors are being asked to forgive debt for a smaller stake in the company than being offered to the employee healthcare trust known as viba. in the case of the gm proposal, for example, bond holders will be asked to forgive $27 billion in debt in exchange for equity

in the company. they are being offered 10% equity plus the option to acquire an additional 15% later on. the viba on the other hand will forgive half of its $20 billion this debt in exchange for acquiring 17.5% of gm's common stock and 2.5 billion and the 2.5 billion there are note. but as i'm sure our witnesses can explain the debt forgiveness and equity stakes do not reflect the extent of the auto workers concessions. indeed, the companies have announced tens of thousands of layoffs as a result of the restructuring. retirees are being told they will lose 30% of their health benefits as well as pension benefits. in gm's case alone, 21,000 additional people are likely to lose their jobs as a result of the bankruptcy. and many uaw wages will be slashed below foreign transplant wages. the courts have been reviewing these restructuring proposals to

ensure an equitable outcome for auto workers as well as other stakeholders. hundreds of thousands of americans and countless businesses will be affected by the court's decisions. it is for this reason that the president was right in my view to task his administration not only with assisting gm and chrysler but with addressing the effects of the auto industry's years of downturn on various communities. but the president's plans are not without controversy. one aspect of the government's proposal is unprecedented. that is the government is taking a huge equity stake. 8% in chrysler and a whopping 60% in general motors. understandably the administration believes that this structure avoids the imposition of further debt on these companies but it also begs the question, how you will the government extricate itself from such a commitment in the future. as richard pozard reports we should be concerned with gm

being an economic vietnam where the federal government throws good money after bad in a vain quest for victory end quote. our witnesses stand fast against such a notion. they've worked tirelessly i want to say to establish the domestic auto industry's viability. but they have toiled to rekindle our competitive edge and a truly iconic sector of the united states economy. let us remember not too long ago it seems america could not walk a city block without sensing the strength of a automaker's brand. their labels adorned buses, rail cars, aircraft. they dominated the u.s. automobile market. in fact, a global market in many ways and owning a buick was the stuff of american dreams. today those images have faded. for the first time the domestic market, ford, chrysler, gm have slipped before 50% going from 66% in 2001 to just 40% today. 47% of today's market.

u.s. industry has long abandoned a diversified product mix instead have had to play catch up with foreign transplants only now have they recognized they must shift their focus from suvs and pickups to marketing more fuel-efficient automobiles. fortunately, one thing has remained constant, the skill, determination and ingenuity of the american worker. even in tough times americans are resilient and they are proving it these days. given the proper tools our domestic industry will keep fighting until we are back on top once again and i believe that can happen so i look forward to the hearing today on how, mr. bloom, and dr dr. montgomery are helping. mr. bloom has been intimately involved i would point out with negotiations with various stakeholders as well as the decisions on on how best to invest taxpayer dollars, in gm, gmac and chrysler. i look forward to exploring the rationale behind these decisions and the administration's plans for the future. dr. montgomery is tasked with a

far different and a far more difficult responsibility. and that is to steer federal assistance to communities devastated by auto-related job losses, plant closings and dealer consolidations. so i look forward to hearing about your travels around our nation and learning of the resources you believe are required to coordinate these recovery efforts. and with that, let me turn to my colleague from alabama, for any opening comments and then we'll hear from our witnesses. >> thank you, mr. chairman. when the detroit three came before this committee to ask u.s. taxpayers for bailout money, they cited the financial crisis as the reason for their troubles. the financial crisis was certainly a reason but it was by no means the only reason these companies were failing. although structural and managerial problems in these companies were decades in the making, they managed to convince congress in the last administration that bankruptcy, the normal course for companies

in their condition at that time, was not an option even if it came with government financing. this was a few months ago. instead, they said they just needed some cash to make it through until the economy returned to normal and consumers started buying cars again. combine the two firms received then $24 billion. these initial billions, however, were not enough to prevent the inevitable from happening, both chrysler and gm have now entered chapter 11 bankruptcy process and each company once again needs additional taxpayer support. the obama administration has set forth a plan for the two companies post-bankruptcy. choosing to bypass the normal bankruptcy process the administration presided over the restructuring through an alternative, ad hoc process. today's hearing i hope will give us the opportunity to understand how the administration came to the conclusion that this support was warranted and expectations

about how the new taxpayer investments will be managed and ultimately unwound. i look forward today to understand what considerations drove the outcomes of both the gm and the chrysler negotiations. why didn't the administration9 address the significant excess capacity in the u.s. possibly by merging chrysler and gm? why did the administration instead favor a merger between chrysler and the italian car maker fiat and what did the administration base its conclusion that the new chrysler will be viable in the long run? did the administration take into consideration the effects that the aid to gm and chrysler would have on other auto manufacturers in the u.s.? what underlays the determination that the u.s. treasury should hold approximately 10% of the new chrysler and 60% of the new gm? by taking such significant equity stakes in the two companies, the administration has embarked on a disturbing and

i believe a difficult road. we've been assured that the administration will stay out of day-to-day management and that it will not allow politics to influence the decision-making process within the companies. on the one hand, that's very reassuring. on the other, it illustrates the inherent difficulty posed by large government interventions in private markets. if the government intends to be a silent partner of sorts, how do they intend to protect the interest of the american taxpayer as a shareholder? i'm not sure you can have it both ways. restraint may be difficult when jobs are at stake. plants need to be closed. and environmentally friendly vehicles prove not to be commercially viable. given the government's bigger investment in gm than in chrysler, will it make decisions that favor the former at the expense of the latter? will the administration be tempted to use political means

to boost annual car sales in an effort to shore up the perceived viability of the two companies? the most difficult question, of course, is how treasury intends to get out of this. our assurances that the government's involvement in the auto industry will be temporarily realistic? did the administration, as in any private investor would, work through possible exit strategies before making its investment? another question, does the administration anticipate that the taxpayer will make money on its investment? and if so? -- how? and does the administration hear envision a long-term government participation in the auto financing business? of course, government action is not the only factor at play in determining the ultimate outcome

for gm, chrysler and the taxpayer. private sector responses are critical. will the private sector lend to or do business with these companies? will there ever be private sector interest in owning these companies, particularly, if the government retains an ownership interest? i look forward to hearing the administration's thoughts on these and other issues this afternoon. and i commend you, mr. chairman, for calling this hearing >> thank you very much. we now have a quorum and i'm going to move into executive session if we quickly can and deal with these two nominees. we do have a quorum and ask the committee to proceed in executive session. ask for the committee to consider the nomination of herbert allison to be the assistant secretary for financial security within the department of treasury. all those in favor, reporting out the no, ma'am nays signify by saying aye. those oppose no. the ayes have it. i ask further the committee consider the nominatifb of mercedes marquez.. mercedes marquez to be the assistant