GM CEO Rick Wagoner's "Talking Points" for Dealer Bailout Lobbying

Robert Farago
by Robert Farago

“Support the Emergency Economic Stabilization Package
We need to protect the U.S. economy and American jobs.

• The problems in the credit markets affect everyone, not just investment banks and big global financial institutions.
• Every day trillions of dollars flow in a circle of credit among small banks, credit unions, regional banks, and large firms.
• If a small town bank cannot borrow funds in the overnight interbank market—say to meet its reserve requirements—it could be forced to call in loans or deny new credit, such as car loans, mortgages, and student loans.
• If millions of Americans suddenly cannot get loans for cars, home improvements or new appliances, business that produce these goods and services will be forced to cut back and lay off workers.
• These layoffs would quickly boomerang throughout the whole U.S. economy, leading to ever bigger rounds of layoffs.
We need to protect the life savings of millions of American workers.
• Nearly 66 million Americans have 401k plans with their retirement savings. The most recent Department of Labor data show that these 401k plans have assets of $2.4 trillion. And Americans hold nearly $20 trillion in equities altogether.
• Almost 2/3rd of 401(k) assets are invested in stocks, with hundreds of billions of dollars of IRA assets held in banks and thrifts.
• The gathering financial crisis undermines confidence in the U.S. financial system and in the U.S. economy.
• The delay in passage of a financial rescue package has contributed to the sharp plunge in the stock markets we are seeing both in the U.S. and around the world.
• Yesterday (September 29th) alone, the Dow fell by 777 points, the largest one day drop in history. In this single day more than $1.1 trillion in U.S. equity wealth was wiped out—from 401k plans and investment accounts both large and small. This loss of wealth was half again larger than the proposed rescue package.
• Congressional action is needed to restore confidence to the financial markets, stop the panic selling of stocks, and allow normalcy to return to valuations.
We need to heed the lessons of history.
• One of the most important lessons in economic history, from the Great Depression, is that a banking and liquidity crisis can become a self-fulfilling prophecy.
• When financial institutions large and small do not have confidence that their deals will be honored, they hunker down and reduce their loans. The result is lost sales, cancelled orders, and foregone consumption.
• The economic rot can spread quickly if it is not addressed by policymakers, especially if panic sets in as appears to be the case now.
• Job losses can cumulate quickly. People may forget that during the Great Depression the unemployment rate hit nearly 25%.
• We simply cannot repeat the mistakes of that era, especially now that we know how that story ended.”

And there I was thinking America runs on Dunkin’.

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  • Zerofoo Zerofoo on Oct 01, 2008

    This all seems to be about credit - the smartest guys in the room lent money to the dumbest ones in the room - and it all went to shit. So now, our government is supposed to give the smartest guys in the room more money to lend to even more unqualified people and businesses? Why can't the government take the 700 billion and LEND IT DIRECTLY to individuals and businesses that need the capital? The treasury could process the loan applications and send out the cash, and the IRS could receive the loan payments. These agencies are big enough to do this. Even if they need a bit of help, I'm sure they can hire some former bank employees looking for work. Credit crisis solved. Hell, the government could even make money on this. Lend the money to qualified people and businesses at 3-5%. Why give the money to the idiots that caused the problem in the first place? They will just make the very same lending mistakes again. Guys like Wagoner are the problem - they permeate American business, and look at the results. ted-

  • Jeff Puthuff Jeff Puthuff on Oct 01, 2008
    "We need to heed the lessons of history." Oh, that's ironic, Rick.

  • Arthur Dailey So they cut the roof off the hatch area of a Dodge Journey?
  • Desertwanderer Across Australia, from Sydney to Perth, via the Nullarbor Highway. Desolate, very impressed to pass a bicycle tourist somewhere in the middle, I think he'd have a story to tell. Oh, and the Cabot Trail, Cape Breton, NS, in my S4.
  • Cprescott Please stop production of all Camry's - they are hideous and vomit inducing ugly.
  • Cprescott Excellent! Complete garbage.
  • Kos65701744 A lot of people back then didn't like the downsizing idea, which is why some didn't sell better than before. Which is why in final gen sales were record high in sales. My own father wouldn't buy a downsized GM car, he switched to a Ford LTD, a nice car but he hated it but wanted a big car