Bailout Watch 183: Senator Chuck Grassley: "Be Like Lee"

Edward Niedermeyer
by Edward Niedermeyer
bailout watch 183 senator chuck grassley be like lee

Dear Mr. Mulally, Mr. Wagoner and Mr. Nardelli:

I understand that your company has been lobbying the Department of Treasury and congressional leaders for additional financial assistance via loans or through inclusion in the Troubled Asset Relief Program. While I understand the economic turmoil that many American businesses face today, I think it’s appropriate to ask those who seek a bailout from the federal government to do everything they can to first cut internal expenditures, including and especially executive salaries and compensation packages.

Most hardworking, taxpaying citizens would like to see all companies, including yours, pursue alternatives to a federal bailout. For example, some experts believe that Chapter 11 bankruptcy would help companies succeed in the long run by allowing them to reorganize while continuing production. They argue that such an alternative will preserve jobs while a handout would only serve as a band-aid to the problems caused by a lack of innovation in your industry.

However, should the federal government assist your company and other auto manufacturers who have failed to make sound business decisions, it’s important to remember that any funding you receive is money from the pockets of American taxpayers. Many men and women are pinching pennies just to get by, making sacrifices and changing their lifestyles to stay in their homes, send their children to school, and grow their retirement savings. I think it’s highly appropriate, if not absolutely necessary, that you do the same.

Most American taxpayers are rightly concerned about the federal government coming to the aid of companies who are in financial trouble, possibly as a result of their own mismanagement and poor business decisions. I agree that it’s time to stifle corporate excess and stop rewarding bad business practices so that we are not providing an incentive for irresponsible behavior in the future. That is why I have asked the Treasury Department and the Federal Reserve to rein in the executive compensation, travel, and other expenses of the companies and banks that are getting federal financial aid.

As you and your colleagues continue to seek federal financial assistance, I urge you to keep in mind the actions taken by former Chrysler Chief Executive Officer Lee Iacocca. When his company was saved from bankruptcy by the Loan Guarantee Act of 1979, he slashed his yearly salary to just $1.00 and those of his executives by as much as 10 percent. Lee Iacocca essentially worked for pennies to demonstrate leadership and forcefully prove to his colleagues that he was ready to make the same sacrifices they would have to make in order to reinvigorate Chrysler. Allow me to quote straight from Mr. Iacocca:

“I began by reducing my own salary to $1.00 a year. Leadership means setting an example. When you find yourself in a position of leadership, people follow your every move. I don’t mean they invade your privacy, although there’s some of that, too. But when the leader talks, people listen. And when the leader acts, people watch. So you have to be careful about everything you say and everything you do. I didn’t take $1.00 a year to be a martyr. I took it because I had to go into the pits. I took it so that when I went to Doug Fraser, the union president, I could look him in the eye and say, ‘Here’s what I want from you guys as your share,’ and he couldn’t come back to me and ask: ‘You SOB, what sacrifice have you made?’ That’s why I did it, for good, cold, pragmatic reasons. I wanted our employees and our suppliers to be thinking: ‘I can follow a guy who sets that kind of example.’”

Mr. Iacocca stated that a government-backed loan was not the only thing that saved Chrysler when it was on its deathbed. Rather, it was the “equality of sacrifice” that allowed Chrysler to survive and return to profits. He stated, “It wasn’t the loans that saved us, although we needed them badly. It was the hundreds of millions of dollars that were given up by everybody involved.”

As you attempt to lead your company out of the red, and especially if you intend to do so with the assistance of federal funds, I urge you to emulate Mr. Iacocca and be the first employees of your companies to make a personal sacrifice. Hardworking American taxpayers, including me, expect it.


Charles E. Grassley

United States Senator

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  • Sayahh Is it 1974 or 1794? The article is inconsistent.
  • Laura I just buy a Hyndai Elantra SEL, and My car started to have issues with the AC dont work the air sometimes is really hot and later cold and also I heard a noice in the engine so I went to the dealer for the first service and explain what was hapenning to the AC they told me that the car was getting hot because the vent is not working I didnt know that the car was getting hot because it doesnt show nothing no sign no beep nothing I was surprise and also I notice that it needed engine oil, I think that something is wrong with this car because is a model 23 and I just got it on April only 5 months use. is this normal ? Also my daughter bought the same model and she went for a trip and the car also got hot and it didnt show up in the system she called them and they said to take the car to the dealer for a check up I think that if the cars are new they shouldnt be having this problems.
  • JamesGarfield What charging network does the Polestar use?
  • JamesGarfield Re: Getting away from union plantsAbout a dozen years or so ago, Caterpillar built a huge new engine plant, just down the road here in Seguin TX. Story has it, Caterpillar came to Seguin City council in advance, and told them their plans. Then they asked for no advanced publicity from Seguin, until announcement day. This new plant was gonna be a non-union replacement for a couple of union plants in IL and SC, and Cat didn't want to stir up union problems until the plan was set. They told Seguin, If you about blab this in advance, we'll walk. Well, Seguin kept quiet as instructed, and the plan went through, with all the usual expected tax abatements given.Plant construction began, but the Caterpillar name was conspicuously absent from anywhere on the site. Instead, the plant was described as being a collective of various contractors and suppliers for Caterpillar. Which in fact, it was. Then comes the day, with the big new plant fully operationa!, that Caterpillar comes in and announces, Hey, Yeah it's our plant, and the Caterpillar name boldly goes up on the front. All you contractor folks, welcome aboard, you're now Caterpillar employees. Then, Cat turns and announces they are closing those two union plants immediately, and will be transporting all the heavy manufacturing equipment to Seguin. None of the union workers, just the equipment. And today, the Caterpillar plant sits out there, humming away happily, making engines for the industry and good paying jobs for us. I'd call that a winner.
  • Stuki Moi What Subaru taketh away in costs, dealers will no doubt add right back in adjustments.... Fat chance Subaru will offer a sufficient supply of them.