Wicker Opposes Federal Ownership of Auto Companies

Senator Says Taxpayers Should Receive Auto Stock; Dealers Should Be Protected

June 22, 2009

The domestic auto industry has been in financial trouble for years.  Hamstrung by competitiveness issues, America’s Big Three auto companies have constantly struggled with their bottom line.  The situation has become so dire that despite receiving billions of dollars in federal assistance, General Motors and Chrysler – our country’s first- and –third-largest car makers – recently filed for bankruptcy.  As a result of the massive bailouts these companies received – measures I strongly opposed – the U.S. Treasury will own 60 percent of shares in GM and 8 percent in Chrysler after the companies emerge from bankruptcy. 

This kind of government ownership of private entities is unprecedented in American history.  The federal government does not have the ability or know-how to run an auto company, nor should it.  For the good of taxpayers and the companies themselves, the government’s involvement in the auto business must be temporary. 

                          REAL AMERICAN OWNERSHIP
In order to ensure Washington’s ownership in these companies is short lived, I have joined my colleague, Sen. Lamar Alexander of Tennessee, in offering legislation that would require the Treasury to distribute the government’s share in GM and Chrysler stock to American taxpayers. 

Under our legislation, known as the Auto Stock for Every Taxpayer Act, stock certificates would be equally divided between the 154 million individual taxpayers who filed federal tax returns for 2008.  As taxpayers, the stock would be in your name – not your government’s name – because it was your money given to the companies.  Each taxpayer would have full control over their shares, having the right to sell them now or hold onto them in hopes of their value increasing. 

This legislation is needed to ensure the government doesn’t own these companies – particularly a 60 percent majority stake in GM – for years to come.  Treasury officials have said they want to sell their shares of auto stock quickly, but as the president and CEO of GM recently pointed out, the government has control over a very large number of shares and the orderly offering of those shares may take “a period of years.” The Auto Stock for Every Taxpayer Act would get the auto companies out of the hands of politicians and back into the marketplace via taxpayers’ hands. 

Distributing auto stock to taxpayers would also be in the best interests of the companies by getting Washington bureaucrats out of their way.  GM and Chrysler leaders are already spending a great deal of time on Capitol Hill.  With at least 60 congressional committees and subcommittees having the ability to call further hearings, it is likely these company leaders would spend even more time testifying in Washington, away from their headquarters and employees, and distracted from the day-to-day task of trying to save their struggling operations. 

                                  DEALER ASSISTANCE
Whenever a company goes through bankruptcy proceedings there are tough choices to be made.  The auto bankruptcies have been no different.  Unfortunately, many dealerships that have been forced to close are being mistreated by GM and Chrysler.  In many cases, the companies have not reimbursed their rejected dealerships for parts and inventory as they agreed to do – even though some dealers had been asked to purchase additional products in an attempt to help their companies before they were forced to file for bankruptcy.  In Mississippi and other states across the country, auto dealerships have been strong supporters of their communities.  They deserve to be treated fairly as they go through this difficult process. 

To help address this problem, I have cosponsored separate legislation that would provide assistance to affected dealers.  The Automobile Dealers Assistance Act would require GM and Chrysler to use a portion of the funding they received from the Treasury to reimburse dealers that were forced to close for the cost of all parts and inventory purchased during the nine months preceding the date of the bankruptcy filing.  This would ensure they are treated the same as if the dealers chose to terminate their franchises or agreements on their own.  The bill would also allow these dealerships a minimum of 180 days to shut down their businesses.
                                 LOOKING FORWARD
These are tough times for our economy, and certainly tough times for our domestic auto industry.  America’s auto dealerships and manufacturers have played an important part in our nation’s history, and they continue to play a significant role in our economy.  That does not have to change. 

If we take steps now to help these companies reorganize quickly and fairly, while also taking the reins of their control away from Washington and back into the marketplace where it belongs, the domestic auto sector will have its best chance at becoming viable once more.