Chrysler has filed for federal bankruptcy protection, becoming the first major American automaker to do so since 1933. The arrangement came after an intensive round of White House-sponsored negotiations among the Treasury Department, the union and Chrysler’s executives and creditors. We get reaction from consumer advocate Ralph Nader, who says President Obama has failed to assert adequate control over Chrysler’s woes. [includes rush transcript]
This is a rush transcript. Copy may not be in its final form.
JUAN GONZALEZ: President Obama forced Chrysler into federal bankruptcy protection on Thursday so it could form an alliance with Italian carmaker Fiat. Chrysler hopes to sell its core assets, including the Chrysler, Jeep and Dodge brands, into a new company that would be owned by the US government, Fiat and the company’s workers. With Thursday’s filing, Chrysler became the first major American automaker to seek bankruptcy protection since Studebaker did so in 1933.
The arrangement came after an intensive round of White House-sponsored negotiations among the Treasury Department, the union and Chrysler’s executives and creditors. Speaking from the White House, President Obama said the partnership will save 30,000 jobs at Chrysler, but he criticized the role of some hedge funds as, quote, “speculators” who pushed the automaker into bankruptcy.
PRESIDENT BARACK OBAMA: I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don’t stand with those who held out when everybody else was making sacrifices. And that’s why I’m supporting Chrysler’s plans to use our bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and onto a path of success.
No one should be confused about what a bankruptcy process means. This is not a sign of weakness, but rather one more step on a clearly charted path to Chrysler’s revival. Because of the fact that the UAW and many of the banks, the biggest stakeholders in this whole process, have already aligned, have already agreed, this process will be quick.
AMY GOODMAN: Chrysler now moves into US bankruptcy court, which must approve the deal. But a group of about twenty Chrysler [lenders] are set to challenge the bankruptcy filing. They don’t agree with the plan to cut Chrysler’s $6.9 billion in debt and say that the selling off of Chrysler assets within sixty days infringes on their legal rights.
We’re going to turn to Ralph Nader later in the broadcast on this issue. But first, we’re going to go to break, and then we’re going to come back and talk about a hundred years of The Progressive magazine with the longtime editor and publisher Matt Rothschild. Stay with us.
AMY GOODMAN: In a minute, we’re going to be talking about The Progressive magazine’s hundredth anniversary, but right now, Ralph Nader is on the line with us, longtime consumer advocate, presidential candidate.
Ralph, can you talk about Chrysler going into federal bankruptcy protection so it can form an alliance with Italian carmaker Fiat? What’s your response?
RALPH NADER: Well, this is an avoidable bankruptcy. It’s now going to produce a lot of uncertainty. This is a very intricate auto industrial sequence to produce a car in America, and already Chrysler plans to shut down, we hope just temporarily, because the suppliers weren’t getting financed. So, Obama, I think, was not tough enough on the bondholders. They’re the ones who wrecked the structured deal.
And he now has lost control of the process. It’s in the bankruptcy court. Judge Gonzalez is a very strong, experienced judge. He did the Enron case. He is not going to let the Obama administration dictate the terms. So you’re going to have delay. You’re going to have uncertainty.
The Obama administration, once they put the billions of dollars into Chrysler, should have taken control of the whole situation, period. Instead, he’s ideologically insecure. He keeps telling the public he doesn’t want to run an auto industry or auto companies, but he already made the commitment in terms of the taxpayer dollars, and now those dollars are at risk in terms of the final outcome for the workers and the consumers in the overall economy.
JUAN GONZALEZ: Ralph Nader, what about this issue of these smaller bondholders. The big firms like JPMorgan Chase and Morgan Stanley all agreed to a deal, but these smaller bondholders, a lot of them equity funds, held out. What is their argument? And is Obama right that they were being basically speculators?
RALPH NADER: Well, he offered them thirty, thirty-three cents on the dollar. They didn’t take it. Their argument is that they get first call on Chrysler assets, ahead of the United Auto Workers’ claims. In other words, they say they are secured creditors under bankruptcy law, and the United Auto Workers’ claims are not secure creditors, so they have to be number two in line to the lenders, to these people you just talked about.
And Obama thinks this is going to be a quick process. But he now is under the control of the bankruptcy judge, who’s a very experienced and by-the-book-type judge. So this is a real blunder by the Obama administration. You could see it during his press conference, how many times he had to say, “We don’t want to run an auto company.”
Well, listen, you put in a little over five percent of the taxpayer money into Chrysler, compared to what Obama put into AIG, $180 billion into AIG, a company that’s not only deemed to be too big to fail, but it’s too secret to fail, given its history around the world. And so, the misplaced priorities are really staggering. Huge amount of taxpayer money Obama gives to speculators and reckless financiers in Wall Street who don’t produce anything. And he is fooling around with the industry that actually produces something and has employment all over the country. So this is a very clear indication of Obama, in contrast to his decisive rhetoric, of his indecisive decision making.
JUAN GONZALEZ: And Ralph, what about the issue now that the United Auto Workers or the workers for Chrysler will now be — have, at least on paper have, a majority ownership of the new company, if it comes out of this bankruptcy, while at the same time having to negotiate their contracts and their wages as well?
RALPH NADER: Well, that’s a big "if," because we don’t know what’s going to come out of bankruptcy. But on paper, they’re supposed to get 55 percent of the company, the UAW. And Fiat gets far less. The US government gets far less.
I mean, ideally, if Obama was a decisive leader in this situation, you would have the union, which has the greatest stake in keeping this industry going, obviously — the executives jump ship with their golden parachutes — the union and the government would own and have control of the — own the company, have control of the board of directors, and then they could push for labor goals, for car efficient goals, for innovation goals, in a systematic way.
But now, everything’s up in the air. Everything is indecisive. The suppliers are wondering whether they’re going to get financed. And with just-in-time inventory, these plants close down in a flick of the eyelid if they can’t get the supplies. So it was a very, very bad decision, and Obama should have foreseen this.
But as a society, we don’t foresee much. Consumer groups have been pressing for decades for fuel-efficient mandatory standards out of Congress and the White House. And unfortunately, the UAW allied itself with General Motors, Ford and Chrysler, year after year, going up to Capitol Hill with John Dingell, their congressman, and saying no to fuel efficiency. And that, more than anything else, was the beginning of the end of the domestic auto industry, in comparison with their foreign competition.
AMY GOODMAN: Ralph, speaking of foreign competition, I wanted to ask you about healthcare, as it relates to the auto industry —-
RALPH NADER: Yes.
AMY GOODMAN: —- but then overall. You have Chrysler and Ford paying more for healthcare than they pay for steel. They can’t compete with the foreign auto manufacturers, because those companies come from countries where the government pays for healthcare. Can you talk about this issue in that context, and then, overall, the lack of a full discussion in the media around the issue of what single payer is and where President Obama stands on this?
RALPH NADER: Another anomaly, Amy. The auto giants could have relieved themselves of maybe $1,500 a car if they pushed for full Medicare for all the way the foreign auto companies have availed themselves in Europe and Japan, where they have universal healthcare.
The problem is that the auto company executives have never wanted to take on the health insurance giants, because, as we all know, single payer puts the health insurance companies out of the arena. It displaces them. They’re gone, just like early Medicare in the mid-’60s for the elderly displaced — except for the Medicare gaps, displaced the health insurance companies from selling insurance to older people. So they didn’t want to take on a big industry, because obviously there could be retaliation. It’d be, you know, a corporate war against one and all. Unfortunately, that was a bad mistake.
Singlepayeraction.org is the grassroot effort in this country to put this on the table. Obama doesn’t want to even discuss it. Congress doesn’t want to discuss it. Nancy Pelosi told a group of reporters last week, “All we hear is ‘single payer, single payer, single payer.’ Well, it’s not going to be single payer” — those were almost her exact words — even though a majority of the Americans favor single payer, a majority of nurses and doctors favor single payer, and a majority of health economists favor single payer. It’s more efficient. It’s more humane. It saves thousands of lives a year that are lost because people do not have health insurance. And it gives people their free choice of doctor and hospital. In other words, it’s public funding of healthcare with private delivery by doctors and hospitals. But, you see, when Obama doesn’t take a comprehensive approach here, when he’s always going forward one, going backward one, unsure of himself ideologically, not wanting to take on corporate power, the situation becomes even worse.
And the auto industry — domestic auto industry situation is not that difficult. They’re going to have to shrink the size of General Motors, obviously Ford and Chrysler, but they still have half the US market. And it’s just a matter of getting rid of their financial speculations with their financial arms and getting down to the business of producing good cars. They have good scientists and engineers. The auto suppliers are the great innovators, by the way, in the auto industry, not the auto manufacturers, and they ought to heed their lessons and their suggestions, as well. Instead, it’s becoming very, very complex, very insecure, and now it’s in bankruptcy court, where it’s out of the control, significantly, of the Obama administration.
JUAN GONZALEZ: Ralph Nader, on another major consumer issue, the House of Representatives yesterday passed legislation to rein in abuses by credit card companies. Your sense of that legislation? Will it pass the Senate? And does it have enough teeth to deal with the problem?
RALPH NADER: It doesn’t have enough teeth to deal with the problem, because it does not provide for the organization of credit card holders. That is, the consumers themselves have got to be given facilities under this bill to join their own full-time consumer groups, so they can have their own attorneys, economists, lawyers to monitor the system. The credit card companies are fine print experts. They are so slippery, you can stop them in one way, and they’ll come up with another. Look at all the fees and the penalties that already exist.
The other thing is, you know, is there going to be adequate enforcement? The Federal Reserve, over the years, has had — and the Federal Trade Commission has had some jurisdiction. They haven’t enforced existing laws. So, this bill is a step forward, clearly — it bans retroactive interest, for example — but it still does not rewrite the contract by saying, “Look, there are some provisions between credit card holders and you, the consumer, that are unconscionable, and they are going to be prohibited.” There’s a long tradition of the Federal Trade Commission doing this with particular industries, so there’s nothing new about it. And this bill doesn’t go that far.
It’s going to run into trouble in the Senate, because you have some Democrats, like Senator Johnson from South Dakota, where there’s the credit card industry, who is going to be able to obstruct it. And he’s not the only one that’s going to obstruct it. So, easier passage through the House than the Senate.
AMY GOODMAN: We want to thank you, Ralph Nader, for being with us. Ralph Nader joining us, longtime consumer advocate and many time presidential candidate.