Thank you for contacting me in regard to the auto industry's request for economic assistance. I appreciate hearing from you.

I have many concerns about the impact that a failure of the American auto industry would have on our overall economy. If Detroit's Big Three ultimately close their doors for business, millions of Americans would lose their jobs and millions of retirees would lose their pensions. This is a serious situation, and we must ensure that any assistance provided to these companies is effectively utilized and that accountability is demanded.

There is no doubt that the recent economic crisis has accelerated the troubles of the American auto industry, however, it is important to keep in mind how the Big Three got to this point. While international automakers adapted to the changing global marketplace, chief executives in Detroit made poor business decisions. They effectively lobbied previous Congresses to block increases in auto fuel efficiency standards while their foreign competitors led the way in producing fuel-efficient vehicles, including hybrid technology vehicles. As a result, the Big Three's share of the U.S. market has declined and they have faced increasingly difficult times.

Recently, the chief executives from the Big Three testified before Congress to ask for economic assistance from American taxpayers. General Motors Chairman and Chief Executive Officer Rick Wagoner told a Senate committee that the failure of the auto industry would cause "catastrophic" economic devastation that would ultimately cost the federal government more than the amount necessary to keep the Big Three afloat during the current economic crisis. After two days of testimony, however, the auto companies failed to provide a credible restructuring plan that would ensure their future viability and protect any potential taxpayer investment.

On November 21, 2008, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid sent a letter to the chief executives at General Motors, Chrysler and Ford, asking them to submit to Congress a detailed restructuring proposal by December 2, 2008. According to the letter, the proposal must include, among other things, a documented assessment of the auto companies' operating cash position, a demonstrated ability to achieve the fuel efficiency requirements set forth in the Energy Independence and Security Act of 2007, and a prohibition on payment of dividends and excessive executive compensation in exchange for any federal assistance. To the extent the restructuring proposal requests federal loans, the proposal must include specific measures for transparency and accountability, and grant taxpayers the most senior status to ensure they would be paid back first.

Please be assured that I will keep your views in mind as Congress continues to deal with the economic crisis in the auto industry.

In the mean time, if you would like to receive email updates about how I am working on behalf of Arizona's 5th Congressional District, I invite you to sign up for my newsletter at http://www.mitchell.house.gov.

Sincerely,









Harry E. Mitchell

Member of Congress



HEM/jw