are feeling so wrong about this and let me give you one other example of where i'd like to ask if the task force is going to take a position. one of the dealers that's being closed, chrysler in this instance -- chrysler is asking for 3% of their loan balance to cover potential chargebacks..

three of the points you raise, senator. regarding the new participation agreement, i don't know if you're aware of this or not but general motors has been an active dialogue over the recent period with both the nada >> and i believe that in ada has put out a statement indicating that they find the modifications have been made to go forward agreement participation agreement to meet the majority of the dealers serve so i think concerns were raised. i think you and others brought them to the attention of gm, and i think the dialogue was had, and i think a good result. so certainly when members of congress bring to our attention situations, we absolutely will do everything we can to facilitate dialogue between the affected stakeholder in the company. we are not going to intervene and become the arbitrator of a dispute, but we certainly are going to ask and insist that the companies listen carefully to the concerns of any stakeholder.

and if it's the particular situation you mentioned regarding the chrysler dealer or the participation agreement which is a broader issue, we are going to insist that they be listened to. but again, i don't want to mislead you. we are not going to substitute our judgment on every particular case. i do know in the case of the chrysler dealers that are not being brought forward, that every single car on their lots is going to be moved to another dealer with financial patient with financing provided by either gmac or other entities, as all the dealers are going to be able to sell their cars at dealer cost. again, this was a matter that was raised, members like you brought it to attention, and i think a good solution was made. we certainly see our role as monitoring and staying on top of these things. and whether it's a senator or a mayor or anybody who identifies a stakeholder who is not being dealt with, we are going to insist on everybody getting a

hearing. but as i said earlier i don't want to mislead you. we're not going to get in and kind of arbitrate dispute between the company and its stakeholders. we're going to insist these companies manage themselves in a commercial fashion. >> well, mr. chairman, of course my timeout but i would just say that unfortunately it's the taxpayers money that you are largely managing. i just think we have a requirement, not only to help the people where plants have closed which i think is huge and important, but also the many communities and the dealers that are getting shafted in many ways. and i don't think that we as taxpayers would want to have that result, and i would hope you would be a very strong watchdog on all of their behalf. thank you. >> thank you, senator hutchison. thank you for your patience. >> thank you very much, mr. chairman. gentlemen, i don't in the you,

your task, literally. let me make it clear how difficult i recognize how these issues are. thank you for your diligence and short attempt to get them solved. you have probably been around washington long enough to know that's a setup, what's coming. >> first 24 hours. >> okay. just picking up a little quickly on what senator hutchison had to say. we will now in utah have no chrysler dealers from our state is to provo. there are a lot people live between vegas and provo. now, all right, it's a rural area, but there are a lot of rural areas and there's a lot of miles, but by virtue of that decision, that guarantees that there will be no possible way for chrysler to come back in that very large stretch of population.

i under i talked to some of the dealers there and there making the same point that senator hutchison is making that if the market says okay, there needs to be a dealer there, the dealers that have been serving chrysler diligently for all of these decades who have been shut out now will not be allowed to set up the new dealership that comes along and some new kid will show up -- newgate, not as it surely by age, but come along and say okay, i have this very large market, now exclusively myself, i don't know what you can do about it but i'm working with senator hutchison and the nada to see what we can think about, doing about it and we are going to be talking to you about that. i just warn you that that may be coming. >> forewarn. >> okay. let us talk just a minute about the whole question now of the

viability of general motors. i take your point that the market cap can be achieved with a much cleaner better balance sheet so that we don't have to compare the new gm to the old gm. but i would point out to you that in terms of a true vulture capitalist, a lot of people don't like that term, but that's basically what you are here as the government. as a true vulture capitalist, you've gone exactly the wrong way. general motors, as a true vulture capitalist, i like what he says that he just happens to put it better than i can -- >> i admit to reading it. >> you admit to reading it, okay. he says the bailout has deeply politicized the company's business model by privileging its money-losing domestic operations, saddled with the

uaw, may not like that term -- over its moneymaking foreign ones. a truly commercial bolter investor would have done exactly the opposite, don't north america and kept a promising businesses in china, russia, europe and latin america. and i have talked to general motors people in these other countries, and they are profitable and these other countries, have been profitable. it's the north american activities that have got us -- that have hurt them. and if indeed you were to take general motors production out of north america, out of a $9 million car market that senator bunning was talking about, it would increase the market share and thereby the profitable ability of all of the others. now, the outrage politically is enormous for that, but if we're going to talk in straight market terms that would have been the

thing to do. i remember, i'll just say this and get your comment on it, reading i cannot tell you the date now, but it's for five years ago, a cover story in fortune magazine called the demise of general motors. and they outlined at a time when the economy was doing very well the general motors was doomed. for a variety of reasons. and one of the interesting things they said was about the quality of general motors cars, and how everybody said general motors cars were terrible quality. at that time, general motors quality had gotten back to the point where it was as good as toyota or honda or any of the rest of it, and they quoted an expert who said the quality is very, very good and no one will buy them. because of their reputation had come along.

and we are now facing a situation where that legacy in the market is still there, and i read columnists who say, well, now the governor -- the government will insist that general motors make good cars. i think general motors has been making good cars the last four or five years. but they are running into that problem. as you deal with all of that do you have a reaction? >> i do, and let me start by trying to agree with you. it may not end there, but i think you're right. i think general motors has been kicking problems down the road for a long time. i think that is an accurate description. i think very intelligent thoughtful people have been talking about general motors deep and systemic problems for a long time and they have not been listened to. and i think the president was clear, these problems have been kicked down the road for a long time. i also agree with you that as little as three or four, five years ago gm's qualities by a lot of measures was up at

toyota's, or of anybody's. the problem is you know consumer sentiment lacks reality because for a long time when the transplant cars were better, gm was living on reputation and then it flips. so these are problems that are not addressed overnight. and i think, and so you're right. this is going to take some time to evolve. the government is not going to insist that general motors make the cars. that's not something a government can insist. what we can do and i believe what we have done is help the company to rethink its business model and to restructure its balance sheet. so i think -- >> let me just quickly because i don't want to take too much more time. but isn't the government going to focus on north america and -- >> let me answer that question. i don't think it's accurate to say that we are castrating general motors overseas. i would just observe to you, for instance, that the european operation impact is also deeply

troubled, and provisions are being made without united states taxpayer dollars to deal with their european operations. they do have profitable operations in other parts of the world. we are encouraging them to grow those, but not with u.s. taxpayer dollars. the decision to make an investment in gm and its north american operations is obviously because these are united states taxpayer dollars. and so while we are able to capitalist we are an american bolter capitalist and the determination was to get them competitive in north america so they can make money in north america. and that's the focus of the activity. that is the only justification for taxpayer dollars, because we are trying to preserve american jobs in american communities and american supplies and american dealers because it is american taxpayers. but the assistance, as any good bolter capitalist would do before he put money in was to insist that there was a path to profitability and competitive, whether it be dealers or be employees or the debt level or be suppliers or be white-collar, whatever it was, to insist that

general motors get competitive so they're good cars can find space in the marketplace and can be successful. and that's been the effort. and that's what we've tried to do it. >> thank you. >> thank you senator. before adjourning, senator shelby has one question and i have one question. my question is for doctor montgomery. i feel like you're sitting there alone. >> going to. >> i'd like to get back quickly how we get out. we are in the week, the taxpayer, the government is in, big time. we know this. how much thought went in just roughly from your judgment went into getting in to gm and

chrysler, and how much thought when, how do we exit? how do we get out and i think the term was used earlier could this be an economic vietnam where it's easy to get in, hard to get out. >> i think that's a very fair question, senator. and again, i want to try to talk about our process. there was a tremendous amount of thought and debate about whether or not an equity stake was the proper vehicle. but again i think when you walk down a decision tree, if you decide that you're going to invest in the company because today's capital markets are not going to provide capital for this company, the need of the company for capital is not determined by us. it's determined by an analysis of the business, but at the end of the day the company has a forecast, you beat it up all you can but eventually you got to decide there's a certain amount

of money that's needed. once you decide the money is the act, then you either have to do it as a debt or equity. you can do as a gift but that seems crazy. so it's going to be debt or equity. the problem is when you look at toyota, volkswagen, honda, you find companies that are not levered. so i think you are driven to equity by the decision to try to maximize the return, have a successful company. as far as the exit, it's going to be orderly. it's going to take it in -- it's going to take advantage of a profitable company in our capital marketplace. >> what's it going today, i know you don't know how many years the government will be in. you don't know exactly whether or not there will be more money. in other words, gm and chrysler, things don't work out quite as you may be thought they would, and they need more money. and you go back to the whale, what will it take to get them on

their feet and a moneyback? it will have to be a pretty rosy scenario. >> no, sir. , i really don't think it is. i want to emphasize that. >> what kind of scenario do you think? >> we believe that using a conservative set of assumptions about market share, about overall market, about margins, about costs, about all the things that would go in, we are strongly believe that this is the last money that gm will require. now i can't make a promise about the future but i can assure you that it is a vigorously debate and thought about question. and it is our best judgment that that's the case, that this is it. >> you say you believe. your judgment, you don't believe they will need more money. now, what's your best judgment? i know you don't know, your best judgment on when the exit will come on behalf of the taxpayer and will the taxpayer ever be

made whole again? >> senator, i don't have a point estimate best judgment about when we will be able to exit. i do believe that there is a reasonable probability that we can get most if not all of our money back. that's the way i would say to the president, and that's the way i set it to him and away i say it to you here today. >> do you believe it's very important for the government not to be owner of the huge industrial company? >> i believe it is profoundly important that we exit this investment as soon as is practicable. >> thank you, senator shelby and i'll asked by one question and i will call on senator johanns and senator. keep it under three minutes if possible. doctor montgomery, i want to talk about for a moment the issue of suppliers. some of their concerns. i chaired a hearing last month with the economic policy subcommittee, the banking committee on manufacturers and access to credit. one of the witnesses, he and his

members get regularly is if you supply for autos you're on a bank in europe black list. the administration stated that the updated sba loan programs is a source of credit for the. that's not what we found typically. because loan eligibility is determined by banks and banks are not making those decisions affirmatively for the. so i want to know what the administration plans are for sba specifically, for loans for them. are there other things we can do beyond promoting diversifying and nuclear clean energy, areas through the extension partnership. what's the plan to provide financing, national emergency grants for autoworkers like dealers and suppliers? by the new authorities from congress like the defense production act? i just want to pick your brain for a moment on how do we get this? how do we get suppliers financed

when credit is still pretty frozen if you're in oddo supplier. >> my impression, senator, obviously the issue you raise about suppliers and having access to credit is one that we hear a lot. i hear a lot as i travel through the midwest states. the administration obviously has tried to move on a variety of fronts from the supplier program, talk, to the sba, expansion to the floor plan for using collateral. all three of which are trying to provide various different participants in the industry credit. there are additional mechanisms to support dealers or to support workers, you mentioned brands, national emergency grants, those are typically available for retraining not as a matter of collateral but there are ways that you can support the work force at dealers to the provision of national emergency grants. in fact, the states of ohio, indiana and michigan, ohio and

michigan have come in for national emergency grants have had used those. minnesota came in for a national emergency grant to support a pooling of dealers all of whom were relatively small in size but in aggregate the total effect was fairly significant in terms of the layoffs. so they did come in for a national emergency grant. so there are a variety of different mechanisms. the sba is one. agriculture has ways to support rural facilities, getting credit out to them. and so there are a variety of different mechanisms that we are already looking at an obviously where tried to monitor going for. i have been told from small business and meditation upon them as they got in the last couple months. i think there are some positive signs, but clearly not out of the woods yet. >> thank you. >> think you, mr. chairman. thank you both for being here. my temperature got a little up when some of the revisionist statements about some of the past and i didn't get to the

point. i do want to thank you guys for your service and even though i know that your political biases are showing in many ways throughout this bankruptcy, and i feel like some of the decisions that should have been made in different ways. that doesn't take away from the fact that you are away from their families and you are doing things that certainly are not as productive for you financially as in other ways. which sort of takes me down the path, i know we've talked, i have a bill, if you guys decide to close every dealer i guess in the country, that's certainly your decision. i have a bill that just eggs, and i hope i don't have to offer it. it states that you will at least make all dealers that you close them for their inventories and parked and we have ashley talked with some on gm and they plan on doing with that with all of their dealers and they are going through transition period. i do think when you look at the history of chrysler and the fact

that the executives there, jim press and others were actually resting dealers to take inventory. and in some ways even kind of threatening them. we have seen evidence of some pretty heavy-handed stuff that if you're going to be a part of our dealer network, this was six months ago, then you have to take delivery of these cars. we can show them as sales. and i think that the way again, a political decision that he made because of the amount of money could not have been at large, but the decision that he made in this bankruptcy, to take these people all across the country that are small-business people that borrowed money, that have signage and may have borrowed for a $500,000, a couple million in some cases to revamp their dealerships, and to basically say you're terminated, you're toast. and we're not even going to take you out of your automobiles and parts which we forced you to take during our time of need. that was a decision that you and his task force made.

you decide. and when i say, a 363 bankruptcy is pretty much a godlike kind of thinker you decide the winners and losers. and it marches on. supreme court by the way said they wouldn't take the course. they didn't say they'd take the case. they didn't say grace over the decisions, but back to the chrysler issue. is there no, the old feelings on behalf of the task force with those decisions about just saying to all the small owners across the country that have borrowed money, have taken inventory to try to keep the company alive and basically are saying you're toast because we don't need you anymore? >> again, senator, i think as i said, the list of victims of the failed corporations is very wide and it certainly includes dealers or i think they should. >> were not try to get you to reinstate the energy you don't need. >> i do believe that chrysler has agreed to buy back all of the cars from the dealers whose

a franchise agreement is not being renewed, and i believe that's been effectuated my understanding is this continuing dialogue between chrysler and the dealer and others like you about what to do about the parts i can assure you we will stay on top of it. we will continue to monitor it. these are not our decisions. but we are certainly in favor of the company working, whether it be senators or dealer representatives or anybody to try to achieve fair and equitable resolution's. i do think in fairness to the intervention of you and others has produced a better result for the participation agreement going forward on gm, has produced a better result for the cars for the chrysler dealers who are not being taken forward, and we would expect that dialogue to continue. and the role that we are going to plate is to continue to encourage the companies to work with affected constituents to try in a commercial way to deal fair and equitable in.

but we are not going to insist that they do x. or y. because we are not running these companies. >> and i know they should. >> times i. senator johanns. i apologize. senator johanns. >> thank you very much. i have to tell you at the end of this hearing and it's been a long afternoon and we appreciate your patience. it is our government that comes across as heartless and indifferent. in different because you keep saying, well, even though we own 60%, we don't want to be in the middle of this, we don't want to run it. but you own it. i don't know how you sustain that position over time. and then, you know, senator brown asked a really good question about product liability claims. it reminded me of a very poignant letter i got from a lady back home in nebraska, quadriplegic, injured and i'll accident with chrysler product,

battle's chrysler for years and years and years, finally on the edge of getting into court, and bankruptcy is filed. and of course, she's not going to get anything from chrysler. you know that, and yet you said in your testimony, well, she probably won't get as much as she wished. , she's not going to get anything. you file a state of bankruptcy and then you file a discharge and the cases over. we put billions of dollars into this company, and then jobs go to mexico, while people here in the united states are losing their jobs, and yet we say well, we're not going to touch that. we don't want to run this company. how many years can this go on? >> well, i guess i would say this, sir. i'm sorry that you feel we have been heartless. i think we have worked to save hundreds and hundreds of thousands of jobs, and thousands and thousands of dealers. the alternatives for this company, both of these

companies, was nothing for anybody. and the alternative that we have managed to craftier while it is very painful for many, very painful for many, preserves the businesses that can be successful going forward, can provide tens and tens of thousands of americans with jobs, thousands of successful dealers, hundreds of thousands of supplier jobs and strong communities. so i think it while it has been exceedingly painful, and i would not debate a word you say about the particular circumstance or dozens of others that i'm sure exists. i think when you balance it out, what has happened here, while very, very difficult, has been a remarkable act of trying to save two great american companies at great sacrifice to many, but in the aggregate, i believe it is far, far better than the alternatives that we faced. but that's our judgment, and i certainly respect people's right to disagree with the. >> i will wrap up with this with the 22nd i have.

hard decisions are best made in a transparent way. for congress to wake up like the rest of the american public on money and found out that over the weekend we had bought general motors, with all of the problems associated with it is really outrageous. really outrageous. thank you, mr. chairman. >> for both of you remaining, if you have further questions, either you or anyone else, the record will remain open for seven more days. doctor marguerite, thank you for being here and thank you for your service to mr. bloom. thank you for being here. thank you for your service. >> thank you.

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