Congressional Talks with Automakers Heat Up (GM, F)

With executives from the Big 3 automaker's currently testifying to Congress, the debate on whether or not American automakers General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler should receive federal aid has now turned into a national -- even international -- debate. On one side, Americans who support the automaker "bailout" are focusing on the astonishing number of job losses which could result from bankruptcy at any of the 3 companies, while, at the other end of the spectrum, opponents have the "Detroit got themselves into this mess, why should taxpayers help?" mindset.

Here is a summary of the comments made by execs and regulators on Capital Hill yesterday:

• In his opening statement, GM's CEO, Rick Wagoner, said his company needs a bridge loan which will help the 'real street'...Main Street, and that far more economic damage will ensue if a bill or loan is not agreed upon
  
• Wagoner and Chrysler's CEO, Bob Nardelli, agreed that "if one of the company's went into bankruptcy, 96 of the 100 'shared' suppliers would be at risk." Meanwhile, Ford's CEO, Alan Mulally, said that GDP would be affected if one of the automakers collapsed.
  
• when asked about how bailout money would be used, GM's Wagoner said he would use the money to continue product growth and development and pay suppliers. Wagoner also said the inability to meet retiree obligations would hurt the financial markets. As for Ford, Mulally said he would use the money to address near-term problems, but feels the company is already in the position to move out of the economic downturn as a 'Turbo Machine' when things turn. Mulally said the company has continued to focus on new product development, better fuel efficiency and safety.
  
• Closing last night's meeting, Committee Chairman Dodd said that he, along with most members, want to help and "Doing Nothing is Not an Option". However, Dodd also stated that he doesn't see anything being done over the next few days. He thinks there is still too much negative sentiment and there are still many questions left to be answered.

Shares of GM and Ford are not responding positively to the stalemate in DC: GM is down 16.2% to $2.58 and Ford is down 24% to $1.28.

Continuing coverage on the talks on Capitol Hill, here are some comments made by the CEO's today. Stay tuned for more coverage as news is released.

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