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House comes down hard on CEOs | The Detroit News | detnews.com


WASHINGTON -- During two days of hearings filled with tense exchanges, one of the most uncomfortable moments took place when Rep. Brad Sherman, D-Calif., asked the chief executives of Detroit's Big Three to raise their hands if they had flown to Washington commercially to ask for financial aid.

No hands went up.

Then he asked if they would be willing to sell their corporate jets and book commercial flights home as a show of good faith. Again, none agreed.

"It's almost like seeing a guy show up at the soup kitchen in a high hat and tuxedo," quipped Rep. Gary Ackerman, D-N.Y. "Couldn't you have downgraded to first class or something, or jet-pooled or something to get here?"

While the sale of the corporate jets wouldn't generate more than a fraction of the $25 billion the U.S. automakers are seeking in loans, the incident illustrated the inability of the three chief executives to make a convincing case that their industry deserves special consideration from the government.

On Wednesday, when the House Financial Services Committee convened its hearing on the loan request, General Motors Corp. CEO Rick Wagoner, Ford Motor Co. CEO Alan Mulally and Chrysler LLC CEO Robert Nardelli looked set to leave town empty-handed.

"I don't think they've said anything new," said Maryann Keller, a longtime auto analyst and head of the consulting firm Maryann Keller & Associates of Stamford, Conn. They came with the message, "We're a big industry, and if we collapse ugly things will happen to the economy, so give us the money," she said.

"If I contrast these hearings with the 1979 Chrysler bailout hearings with Lee Iacocca, when Iacocca went before Congress he had a plan," said Keller, who testified at those hearings. "He was able to articulate a plan to get from where he was to being able to repay."

Awaiting the plan

Watching Wagoner and his fellow chief executives on TV this week, she said: "I'm not hearing the plan that this is how we'll get better. I haven't heard from them how they expect to repay their loans."

Jeff Caponigro, CEO of Caponigro Public Relations Inc., said he was struck as he watched the hearings on TV by the resistance the executives encountered in Congress from the outset.

"What was puzzling was the lack of a bank of good will when they went into the hearings," Caponigro said. "They had a reputation management issue, if you will, before they even opened their mouths."

Normally, an industry responsible for so many jobs across so many states would elicit a warmer reception in Congress, he said.

But he said Detroit's automakers are widely perceived as having made too many wrong decisions. They were too slow to bring to market attractive and reliable cars, they persistently pushed trucks, and they were seen as resisting fuel-economy improvements.

At the same time, they haven't conveyed clearly what they have done to become more competitive, he said.

"There were some bad performances by the CEOs," said Jim Hall of 2953 Analytics LP in Birmingham, "but there were times where the congressmen looked dumber than a bag of hair."

He said some of the data cited by the lawmakers were dated.

But he said the auto executives also made some gaffes. There are good reasons to travel in a corporate jet, he said, which allows for tighter security. "But there are a gazillion reasons why it's a dumb idea when fiscal issues are being discussed," he said.

"None of the Big Three are very good at getting their message across," he said. "If they were, you wouldn't have everyone, even in Detroit, calling it a bailout. It's a loan."

Skepticism abounds

The three CEOs, accompanied by United Auto Workers President Ron Gettelfinger, encountered as much skepticism in the House hearing Wednesday as they did Tuesday when they appeared before the Senate Banking Committee.

"The fact you flew in on your own private jets at tens of thousands of dollars in costs just to make your way to Washington is a bit arrogant before you ask the taxpayers for money," said Rep. Patrick McHenry, R-N.C.

Rep. Michael E. Capuano, D-Mass., said: "My constituents do not trust you," and added that he needed assurances that "you're not just going to blow this again and that you really did get the message."

'I sit here with glee'

After the hearing, as he made his way through the crowd, Gettelfinger pointedly remarked that he had a plane to catch.

Earlier during the hearings, he said: "I sit here with glee at some of the comments made to them," in a reference to the three embattled CEOs.

But Gettelfinger and the UAW are part of a situation that looks unreasonable in much of the rest of the country, Keller said.

"Who gets these kinds of wages in today's world? Who gets a jobs bank?" she said, referring to idled workers who collect nearly full pay. "The sacrifices they've made are not enough. Times change."



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