Transcript of Rep. Thaddeus McCotter's openingstatement at the Financial Services Committeehearing on November 19, 2008

http://www.youtube.com/watch?v=U7YBjjLKLd0

Chairman Barney Frank (D-MA):

The gentleman fromMichigan, Mr. McCotter, is nowrecognized by the committee for acombined opening statement andquestions.

Rep Thad McCotter (R-MI):

Ithank the chairman. Thank you foryour indulgence. I'll have anopening statement and somequestions. I'll try not to take uptoo much time – if I cover groundyou already have, please feel freeto disregard it and put in your own point.I come from Michigan's 11

district, my district borders Detroit. Heavyautomotive industry. A lot of dealers, a lot of suppliers; a lot of whitecollar, a lot of blue collar employees. One of the first things I would liketo make

clear

- that I personally find offensive – is the implication thatthe domestic American auto industry has not done anything since the1970s to restructure.If anyone

believes

that the Big 3 were not restructuring prior to thecredit crisis bringing them here today, or to theCAFE

mandates

thathave brought them here today, I invite you to my district. I invite youto look at how the fragile fabric of peoples' lives has been renderedasunder by a necessary restructuring process that has required giveand take from both sides, from labor and management. I will show youthe white collar workers that are out of work, I will show you the bluecollar workers that are out of work, I will show you the pensioners thatare worried about their health retirement benefits being lost, and I willshow you theWixom Assembly Plantthat is closed.I bring this up not for your pity for my constituents; I bring this up toshow you that the automotive companies and the UAW have beendoing what they believe they possibly can to restructure and become

globally competitive and ensure that America has a domesticmanufacturing base for the generations to come.

[ Why We're Here ]

The second point I wish to bring up is why they're here. Throughout theentire process of the restructuring, we would hear rumors inWashington that the Big 3 were coming for a federal assistancepackage for one reason or another. And yet as the white collarworkforce and the blue collar workforce and the pensioners sufferedthe restructuring, they did not come. They did not come to Washingtonwith their hands out. They were not here "begging," as it is pejorativelyput in the press. They wanted to restructure without us making itharder for them to do soUnfortunately, the first thing we did, this Congress, is we passed a$100 billion CAFE standard mandate on the auto industry, which wouldhave been far worse, had it not been for the strenuous efforts of thedean of the United States Congress, John Dingell.Secondly, through no fault of their own as they went through therestructuring process, the whiz kids on Wall Street with their computeralgorithms decided to screw up the entire credit market of the UnitedStates. This was critical to the restructuring of the auto industry. Andthen this Congress, in my opinion passed a very bad piece of legislation: a $700 billion bailout of

the very people on Wall Street who caused the problem

.And now you see hundreds of billions of dollars slated to go to "healthybanks" to free up the credit system that has yet to free up – or theywould not be here today.

[ A Question of Equity ]

So the question that the chairman puts before us - in terms of thelegislation he is proposing, is to me not a matter of a bad policy thathas already been imposed on the American people and has yet to work– it becomes a question of equity.If the $25 billion is appropriated for Wall Street, some of it probablytargeted toward healthy institutions – financial institutions, howevernebulously defined – a "no" vote on a bridge loan to the auto industrymeans that the $25 billion will continue to go to Wall Street. And tohealthy banks.

A "yes" vote means that it actually goes to Main Street - not just for thestructure of the Big 3, the labor leaders, the auto leaders - but for thevery hardworking men and people

whose taxes have gone into the$700 billion bailout

which has yet to free up the credit market.So we are in the realm of equity here. And while I did not support thatbad policy, we had here yesterday, Secretary Paulson, who explainedthat he believes that one of the fundamental problems that we face instabilizing our financial system is the problem with home foreclosures. Iwould agree with that. I would agree that the biggest problem we haveis real working peoples' ability to pay to stay in the homes that theyhave.If we turn our back on Main Street, if we continue to send all the moneyto Wall Street who caused the problem, and the auto industry doeshave to go into bankruptcy, you will see foreclosure rates in thiscountry

skyrocket

– from people who played by the rules and who arecurrently paying their mortgages and are not part of the problem thatMr. Paulson says is already big enough to be worthy of addressing.

[ Where Do the Labor Costs Go? ]

Finally, I want to address the issue of labor costs. I have long said thatone of the problems Michigan suffers is the fact that we are currentlystill operating under the industrial welfare model of governance. Andthis is where the Big 3 and the UAW get a very bad rap. They talkabout "shedding labor costs" that have been duly negotiated becauseit makes them uncompetitive. My response to that is, "Where do thoselabor costs go?" The traditional model of governance throughout the 20

century of theUnited States – because we were an industrial power – was thatbusiness would pick up some of the benefits of employees andgovernment would pick up some of the social needs of employees, andthere was always the tension as to which would do what, but you hadtwo

pillars

to help undergird American prosperity.As we move into what people call the "new global economy," – thepost-industrial economy – my question is this: if the business entities,in negotiation with the labor entities, decide that they can no longer becompetitive with these "labor costs," where do those go? They're going to go to the federal government. And so we haveanother instance where we can be penny-wise and pound-foolish, and