Thanks to Sean Hackbarth, I was part of a conference call with Sen. Lamar Alexander (R-TN), discussing his plan to distribute the Treasury-held common stock in Chrysler and GM directly to the taxpayers within a year and his new Car Czar award. Since I managed to have my digital voice recorder working, I was actually able to grab a few notes from that. Of course, partly because of my natural quietness, and partially because of a heavy-hitter lineup on the call so experienced that even Fausta didn’t get to ask questions, all I can offer is a writeup.
- The Auto Stock for Every Taxpayer Act (S. 1198, no text available yet from THOMAS) would require the Treasury to distribute all of the common stock to the 120 million or so Americans who pay individual income taxes within a year of GM leaving bankruptcy (side note; Chrysler has now closed its “sale” to Fiat/UAW/US and Canadian governments and will henceforth be called UAW Motors on this blog).
- Sen. Alexander describes it as the fastest way to get the stock out of the hands of government, and brought up the example of the Green Bay Packers and its community-owned structure (Sean’s influence at work).
- The most-important thing is to stop the political meddling that results from government ownership, citing the White House-ordered firing of Rick Wagoner as CEO of GM, “suggestions” on where the HQ of GM ought to be, Rep. Barney Frank (D-MA) pressuring GM to keep a Massachusetts distribution center open, clamors from Congress on what models to make (do I hear Iowahawk’s Pelosi GTxi SS/RT Sport Edition?), the pay czar to “fix” the price of labor.
- The rationale to the taxpayers is, “You paid for it, you should own it”.
- As part of that, the Car Czar award, first given to Rep. Frank on Monday, will become a regular feature.
Of course, it wouldn’t be a conference call without questions. As I said, we had some heavy hitters.
- Noel Sheppard of Newsbusters started up with a two-parter: How will the inevitable calls from the Democrats to include non-taxpayers be addressed, and will the stock distribution will be based on population or percentage of taxes paid? Sen. Alexander hasn’t heard much from the Dems yet, but the principle is that we should give the shares back to those who actually paid for them. As for the distribution percentage, he acknowledges that a percentage-based would be better, but the population-based split would “give the little guy a break” and be “simpler and cleaner”.
Side note – the Treasury would have roughly 310,000,000 common shares in “new GM”, and an unspecified number of shares equaling 8% of the membership stake (all non-voting) in UAW Motors, so a population-based split would be “simpler and cleaner”.
- Jennifer Rubin of Commentary Magazine and Pajamas Media wondered if the Chrysler and GM bankruptcies have changed the rule of law regarding private property owners. Sen. Alexander said that we’ve damaged the rule of law and the rights of private property owners. He pointed out that, in the future, private entities will be slower to lend money to enterprises and rely on contracts to pay the money back, and asserted that our system won’t “function very well” in that scenario.
- Travis Griffith at CarGurus.com asked about stock dumping by those that would get the distribution. Sen. Alexander notes that stock distributions happen all the time. The alternative would be for the Treasury to slowly divest over 5-7 years, and he expects the government to run both right into the ground before they can fully divest themselves.
Side notes – I’d expect each invidiual 3-share stake in GM to be worth somewhere around $30 at the close (based on the $1 billion in VEBA funding the UAW is giving up for 17.5% of the common shares) and each individual membership stake in UAW Motors to be worth somewhere between $4 and $7 as of a couple hours ago (depending on which valuation method one uses). At the same time, the UAW will be looking to dump significant chunks of its holdings, which will depress the estimated values and limit the dumping.
- Stephanie Davis from RFC Radio wondered whether the political meddling would be extended to Ford. Sen. Alexander hopes not, and the faster the stock gets out of the Treasury, the less likely it is that Ford will be meddled with. He read off a long list of enterprises government has been meddling in over the last 9 months.
- Noel Sheppard asked about Sen. Alexander’s thoughts on the European rejection of their leftist leaders. Sen. Alexander pointed out he has been around a while, and he’s seen things change quickly. Europe has been at points in the past a leading political indicator of trends in the US, especially in right turns. Takeaway quote; “(T)he more the Obama administration practices politics of Washington takeover, the more wary Americans are going to be of one-party control in Washington, which is what we have today.”
- Somebody from RedState (interference on my DVR prevented me from catching his name) asked about the politicization of the Chrysler dealership closings (which took effect at the close of business yesterday). Sen. Alexander noted that the mere odor of politicization is reason enough to end the “incestuous relationship” of the government owning the car companies.
- Travis Griffith asked how often we can expect a Car Czar award. Sen. Alexander expects a couple a week because we’re in a target-rich environment. As part of previous answer, he mentioned that he might have to give one to himself for urging that the Spring Hill, Tennessee GM plant stay open.
- Missed who asked this one, but someone asked whether Sen. Alexander had any confidence that the government control of GM will be transparent. He’s hopeful that the demand for transparency will make GM the most-public private company in America, and that the pressure will get the Obama administration to get the government out of GM.
Sean said he would get a recording out to those of us who participated later, so I won’t inflict you with my very-low-quality version.
Revisions/extensions (12:49 pm 6/10/2009) – Ask, and ye shall receive. Sean came through with audio.
I haven’t completed my thoughts on the bill, but it definitely sounds intriguing. One item I haven’t seen addressed yet – the preferred shares that the Treasury will be holding.
