assumption they made we flipped on its head and asked the reverse and we used our own assumptions too. if they believe it was going to be x, we asked if a would-be 2 x, we did not fasten any single point estimate. as a lender and investor, we acted as traditional investors, we look at a variety of scenarios, we asked ourselves if it was lower, execution was better or worse than plan, how did these look, that brought us to enterprise value using traditional techniques, discounted cash flow, the things you would expect any third-party investor to look at. we are the government and we are doing this because the president has directed that this is a critical industry, but we tried,

every aspect of this to be commercial, to ask what is the cash flow capability, what is the likely earnings capacity of the company. from that, we created models of potential enterprise value and engaged in the kind of bargaining that i described which is to say arm's-length bargaining between the lender/investor and other stakeholders. >> attention the ranking member talked about, the government not involving itself in day-to-day management decisions which is certainly the right approach, but thinking, if those projections don't come through, if you have quarter upon quarter of growth or lack of growth, if the company's do not begin to produce automobiles that will compete in the marketplace, what

is the government's role at that point? as investor of our taxpayer money, what if they don't live up to your expectations? >> as a lender in chrysler and general motors, there will be covenants regarding performance and lenders have rights that we would expect to avail ourselves of. i know that the president is highly committed to not having this wander into the middle of the company and take it over. the company will have a board of directors comprised of independent business men. i would point you to the 2 gentlemen who agreed to serve as chair of chrysler, 2 excellent individuals, would we expect them to run the company? >> my time is up, regrettably.

>> thank you both for being here. that want to point out your funding a little bit on the history side of this. the administration prior to you coming in, laid out a loan program that set of the companies put forth a viable plan by february 17th, they would not call the loan by the end of march. they did not do that. that would have precipitated you calling the loan. somebody is letting you get away with this precedent thing. but they set in place procedures that said if they presented a viability plan as appropriate they would call the loan. they did not put into place a plan. i want to get the record straight. let me talk about the money that has gone in. we have $85 billion in the company's, 50 in gm, 16 in

chrysler, 14 in the supplier's. you have answered very affirmatively there's no money, but my understanding is, i have seen the other senators moving around a little bit with the energy bill. how much do you expect them to get out of another pocket? it is all our money. >> let me try to answer your question. a very small correction. the total u.s. government commitment to chrysler is $12 billion, remaining funds are from the canadian government. >> we had a guy out here who told us if we put one dollar in these companies we would end up $125 billion. we have already gone past that. and number of us are working to keep that from happening. how much money have they applied

for? >> both of the companies have applications for 136 funding. my understanding is it is a competitive process where many -- >> how much? >> they both applied on the order of $546 billion by have no indication that they will receive it. it is a competitive process. there are dozens of companies applying for it. if they're deemed worthy they will get it, if they will not they will not. >> the policy things they're being changed around looks like they might have a good chance receiving it. let's just say that they get half of that. on the uaw peace, there has been a lot said about shared sacrifice. my understanding is the existing employees are making exactly with the news contract, what they're making on the old contract. >> the answer to that is no.

their base wages -- >> exactly the same? >> i'm trying to answer your question. >> says the cost of living improved in which they had in their paycheck which has gone away. >> the base wages are exactly the same? the health-care benefits are exactly the same? you did away with the monday after easter holiday but my guess is they don't get very fearful when you come in the room to negotiate. how has that negotiation been? >> i will let them speak for whether they are fearful are not. negotiation has been extremely vigorous. they have made very difficult sacrifices. >> i don't want to go into a long dialogue here but haven't heard of these sacrifices yet. >> $7 billion an hour of reduction in compensation.

to me -- >> after 40 hours or so. >> company's value the concessions at $7 an hour. >> what has troubled me about this, i know politics are not involved, i would like to know -- you are not involved in politics. what is the number keeping the plant open in the district? we have the same kind of thing happening in tennessee, who called to get those things change? >> i can only speak for the administration and to you what the president directed us to do, we are not meddling in those matters. >> who made that statement? >> the president. >> the president kept it open? >> the president directed the administration. >> who did barney frank of? >> i can't comment on people who are not in the administration. >> let me go a different angle

politically than. the greatest generation we all herald, we have statues and tributes to the greatest generation, many of which invested in bonds for our retirement. gm was going to be something they found and i imagine there circumstances, gm bondholder, a 90-year-old veteran who expected retirement, has been basically made test by the decisions of this task force. if you look at the uaw's component, they have done really well from the standpoint of their ownership. i really respect him and he answers questions very clearly, as do you. i have been a little discouraged to hear that we don't need them anymore. we have to have workers.

there has been an overt concern that if you didn't do everything necessary, they would strike. number of occasions you'd pointed to what happened in new york state. educate as a little bit on that thinking, and basically these guidelines where bondholders invested in the company, you don't need them anymore. >> let me try to answer that. i hope we would never act like godlike anything approaching that. i think there is sacrifice in general motors to go around for every one. there are enormous victims of the fact that general motors is a failed enterprise. bondholders are clearly among them. the communities who have come to rely on those jobs, the dealers, the list is very long. tragically, this company became insolvent, very insolvent and it is a failed enterprise. that meant that the only way to

revitalize it, we had 3 choices, we could have let it liquidate with all the damage that would have caused, we could have made good on all promises with taxpayer dollars and that would have been many multiples of the investment that has already been made, we could have taken a commercial which is what we believe we did, a commercial approach to this restructuring. and in a commercial approach to restructuring, a business under, financial investor will look in a pretty hard-nosed way at who is needed to make the company succeed going forward and do is not. in general motors, the decision was made, as a was in chrysler, which we supported, to take the suppliers and supply the company with goods and services, and essentially pay them 1 hundred cents on the dollar which nobody else got and the reason was not about bleeding hearts for suppliers, it was about the commercial decision. if you don't have a steering

wheel you can't make a car. commercially, taking those unsecured claims with suppliers and leaving them behind did not make commercial sense. there are warranty holders who bought gm cars. commercial decision was made that those warranty holders, if you made them angry, probably wouldn't buy a new gm car. in all these cases we believe with the company in the lead and the treasury questioning them every step of the way, commercial decisions were made about to treat each constituent. i believe that everyone has made enormous sacrifice and those sacrifices have met 2 tests. in each case the stack -- stakeholder did better than he would have if the government had not intervened and he was treated in a fair way given the commercial realities of marketplace. in the chrysler case, a

bankruptcy judge heard over 30 hours of testimony on this exact set of questions and ruled completely in our favor in a very detailed, 47 page opinion, it was upheld unanimously by the court of appeals and decided not to take up the matter. they did not see any issues that rose to them. this has received enormous scrutiny at all levels and in the media. we are confident that this has been done in a commercial fashion. we understand there are a lot of disgruntled, unhappy people. but in a failed enterprise that is inevitable. >> i would like to thank you for what you are doing. you could be making a lot more money with a lot less aggravation doing something else. i am grateful to you, it was good being with you in indiana. i am grateful for the town hall

meeting you had and the financing you announced. thank you both for that. i am one of those who thought it was not an appropriate thing to run a gamble at this moment in time with the economy and the country and there were some sober analyses that if we just allowed these industries to fail it would have just been then, it would have been dealers across the country, it would have been middle-class people, a lot of communities would have been hurt by this. if the economy had been growing by leaps and bounds, that is a risk worth running the given the present state of the economy, the better judgment was to not run that risk. as long as there was a credible plan in place to try to maximize the chances that the taxpayers would get a return on their money. you don't just throw money after losing proposition but if you have a reasonable prospect of getting repaid this was the right thing to do. i would like to focus on that

issue. i understand you want to maintain maximum flexibility. there are a lot of imponderables. you are a bright businessman. in response to several of my colleagues from a high node business perspective, what you think the chances are that the taxpayers will be repaid. >> i appreciate the question, it is a fair question. the best i can give you is we have looked at scenarios where a very substantial portion, potentially all of the taxpayer investment will be returned. but i would by no means say that i am highly confident that will occur but there are reasonable scenarios where it could occur. >> the word reasonable normally denominates probability of greater than 50%. >> i would not put a probability on it. you are a lawyer, i am not.

>> handicap by constantly struggle to overcome. >> you're doing a fine job. we looked at a lot of scenarios. obviously that was a key objective for us, to say that there is a reasonable chance that this could happen. that was one of the key bases we took when we insisted as we did that the company be aggressive in its business plan because of the end of the day the ability to pay back the money through the sale of shares is based on the profitability of the enterprise and the profitability of the enterprise is based on how hard-nosed they are prepared to be about dealing with their realities. >> let me ask you, assuming there's a reasonable improvement in market conditions, we will not be selling these vehicles forever. we are in gm for $50 billion, looked to me like the total cattle is 83, 60%, we get you

about 50. what earnings per-share do they have to achieve to reach that kind of market cap? >> you and many others can do the arithmetic. the company will have a trading multiple. hard to know what that will be. it will depend on a wide variety of factors. i say what i said. there is a reasonable chance. it will obviously take a period of time and it will take a recovery in our economy. obviously it is a key focus for us. >> with the holdings the taxpayers now have, there is no schedule, the overhang will be substantial and therein lies the problem. perhaps you haven't contemplated this, but would a periodic sale cotta preordained basis so you're not trying to time the market and the market can factor that in so we could whittle down our holdings over a period of

time, is that something would contemplate? >> we have looked at a variety vexes strategies. you have privatization in eastern europe and western europe and england. we have tried to do a pretty wide canvas and the conclusion is there's no perfect system. we look at what bill gates did with microsoft which was a time schedule. our judgment at this point is a prearranged time schedule will create more problems than it solves but that is one of the strategies we found. >> my last 2 questions, you are and poverty answered one of them. the supply chain is in reasonably healthy condition, and if you are an employee or shareholder of ford, what do you make of this and how do you compete? >> i can't sell you the supply chain is relatively healthy, it is troubled but we are

monitoring it very carefully, we are deeply aware of the interrelated this of the supply chain. when the supply chain goes down, even if you didn't have a view of saving gm and chrysler you have for, honda and nissan connected to the same group. we are deeply aware of the into connectivity of this and we are monitoring it closely. we believe it can hold together the we are very mindful of that. the fourth question is one we have looked at carefully. we believe that ford is a good and competitive company, we believe it will be able to survive and thrive. we are in constant dialogue with them. it is a decision not to participate in this program but that is their choice. >> thank you,. >> senator johanns. >> mr. bloom, references made in

the previous question about intervention from congressman barney frank. you can see why that leads to sell much suspicion even among members of this panel. i don't have that kind of power, dealerships imposed in the state of nebraska. were you aware of that? did the ceo or somebody call you and say what do i do with this? barnard frank what this facility left open? >> we were not. >> did you learn about it after the fact? >> i learned about it the same way you learned about it. >> do you know of any special deals that have been made? that we have not press the they did in? >> we have not participated in that activity. i can only speak to what the president has directed the administration officials to do and what we have been admonish to do and what we have done. we are going to continue to do what he has those do.

>> does that mean you don't know of any other special deals that were struck? >> i don't know what i don't know. i can tell you the auto task force has been explicitly and clearly discussed. we have regular discussions internally about this and i can assure you that nobody from the administration has been involved in trying to pressure these companies to make specific decisions regarding dealers or plans and i know we have been instructed not to do so in the future and we will not. >> if i might focus for a minute or 2 and talk to you about the rights of people. i didn't do a lot of bankruptcy when i practiced law but i did do some. is my understanding correct that

if you are a shareholder and you go through regular bankruptcy, that on the other end that bankruptcy, you are going to basically end up with nothing? >> i would say the overwhelming majority of bankruptcy cases are premised on the company being insolvent, and with the shareholders, the bottom of the totem pole, the shareholders should expect to not receive any recovery. there are few exceptions to prove the rule but that is a fair description. >> that is what happened with shareholders and general motors. they have a stock certificate that is a worthless piece of paper. >> the company's plan does not provide any recovery for shareholders. general motors is an ongoing case so i can't predict with certainty the outcome. but the plan that has been filed is not contemplated recovery for shareholders. >> dealers have been notified that they won't be dealers for general motors anymore. same deal, they are out of luck. >> the dealers would be expected to have an unsecured claim

against what is called the old state. they will recover what other unsecured creditors -- dealers, shareholders, they come out of this basically with nothing. if the plan is adopted. >> they come out of it as they would in a traditional bankruptcy. either unsecured creditors or in the case of shareholders, even below that. >> every once in awhile and employee would come to my office and say i am an employeeb. of y, z company, they owe me 2 weeks of wages. i would say let's file a claim. you don't need that company to buy groceries. i don't think you are going to see it and i am always right. employees have no rights. describe the rights of the employees like you have described for me the rights of dealers, the rights of

shareholders, in just a regular bankruptcy. >> the treatment of employees in regular bankruptcy varies all over the lot, largely because the entity trying to reorganize, if it is a 363 sale which is going on in the case of general motors, the entity providing, being the sponsor of the new entity, will make determinations about what the proper treatment is for employees. in the case of general motors, the decision was by the management, that keeping both salaried and hourly workers working and on the payroll was an important part of maintaining the continuity of the business and having a successful enterprise going forward. the determination was made to continue to pay wages, as i indicated for warranty holders. these are business judgments made by companies and bankruptcies all the time and i

have been involved where employees did receive continuity of wages. i have been in bankruptcies where they didn't. it has been all over the lot. >> what influence did the administration have on that issue? >> the influence we had is to work with the company to try to come up with a commercial approach to this question which is to say how do we best maximize the value of the government, the government is putting a huge amount of money into these enterprises and the only way we get it back is if there is a viable enterprise going forward. the question we ask the company in each case is what is the smallest amount you have to give because you would like the smallest burden you can have, what is the smallest amount you have to give consistent with building a successful enterprise? every single stakeholder, we challenge the company to make that kind of determination, and that was the role we played. as i said to an earlier

question, we are not the management, we are not running the company, but we are the provider of capital. we had an obligation to challenge them, to make sure they were acting in a fossil and commercial fashion. that is what we tried to do. >> let me ask one more question. during any of these discussions as shareholder rights were being extinguished, as dealer rights were being extinguished, as people were sacrificing and our communities were being affected, did anybody with the administration, with the task force, ever say it seems like buying 60% of general motors is the big enough decision for us to go to congress and ask them what they think of this. >> i think the president was proceeding under the authority that was created through the creation of tarp and the prior

administration made loans under that and the president determined that these investments were appropriate and proper under that legislation. >> you agree with me, i would hope, loans by the prior administration are a vastly different creature than end in up with ownership. >> i would say what i said. the administration believes it was proceeding under statutory authority that was granted and doing the best it could in a difficult circumstance. >> last question. >> go ahead. >> this is your third last question. >> i will stick around. >> go ahead. >> in your role, does that make you uncomfortable? >> doesn't make me uncomfortable? that we never got an opportunity to say yes or no on this? i am working as hard as i can

under the direction of the president to try to save these companies and minimize taxpayer dollars required to do it. it is an exceedingly challenging, we are doing the best we can. >> thank you. i will take my 5 minutes. i appreciate both of your being here. i know the personal sacrifices you both make in taking these difficult jobs. i appreciate your driving from pittsburgh every week. i particularly appreciate that you took this commercial approach, both the bush said ministration and obama administration want gm and chrysler to move forward, not to liquidate those companies. there seems to be a perception in this room and among some, not just in this body but elsewhere, that the employees took no hits but everybody else did, the dealers, the bondholders, the

executives, the communities, and when you represent a state like i do, you see what kind of hits communities take and what kind of its workers take. there are tens of thousands of workers losing their jobs, not just in chrysler and gm bought beer one suppliers and beyond, many of them are non-union companies that pay $15 an hour or more in many cases but not more in any other case. the $7 an hour term in eaton is made, plus lost jobs, what is meant to the communities. a lot of us, and the country, appreciates that you have done this in a way that keeps these companies alive and growing in the years ahead. i appreciate your optimistic assessment. i want to talk about last year, what happened, where we are going. i want to be specific on one

question, a community that has been held -- hit hard by this. some of our committee members worked with the bush administration to provide loans to the automakers. it would have required the company to achieve concessions from stakeholders' with a strict time frame. as my colleagues recalled, the legislature was filibustered and died in the senate. many of the same critics calling for specific sessions from workers and bondholders are saying the government backed plans advantage one stakeholder over another. you touched on that in response to questions from senator corker and others. compare those in the current restructuring plans being considered in bankruptcy court. >> in all