Today, Financial Services Committee Chairman Barney Frank sent a letter to Treasury Secretary Paulson urging him to adopt accountability protections identical to those passed by the House last week in the Auto Industry Financing and Restructuring Act saying, “given the serious mistakes that senior auto industry executives acknowledge they have made in the past, such safeguards are absolutely necessary to ensure that taxpayers are protected and that the retooling of this critical industry proceeds as quickly as possible.”
December 16, 2008
The Honorable Henry Paulson
Secretary of the Treasury
Department of the Treasury
Dear Mr. Secretary:
In the absence of final Senate action on legislation to assist the “Big Three” U.S. automobile manufacturers, I am pleased that the Administration will provide critical bridge financing for these companies to help them through their current financial difficulties and restructure their operations.
As you know, the House-passed auto industry bill contained strong provisions to protect taxpayers and ensure that the companies engage in the kind of fundamental restructuring necessary for their long-run viability and success. One of the bill's most important safeguards required each company receiving bridge financing to inform the President's designee of any proposed asset sale, investment, contract, commitment or other transaction valued in excess of $100 million, and allowed the designee to prohibit any such transaction that would be inconsistent with or detrimental to the long-term viability of the company. This provision, negotiated with the White House, would provide an important check on management and make sure that the companies stay sharply focused on restructuring.
As a condition of aid to this industry, I strongly urge you to adopt accountability protections identical to those contained in H.R. 7321. Given the serious mistakes that senior auto industry executives acknowledge they have made in the past, such safeguards are absolutely necessary to ensure that taxpayers are protected and that the retooling of this critical industry proceeds as quickly as possible. They will also ensure that no stakeholder will be singled out to make any further commitments until a viable plan involving all stakeholders has been approved.