Senator Corker Weighs the Auto Bailout

The Tennessee Republican says, "This is an opportunity that comes along once in 50 years," but he doubts the final bailout bill will spell out conditions for Detroit

There are plenty of battle lines being drawn over a possible taxpayer bailout of the U.S. auto industry. There's the unionized industrial Midwest vs. the nonunionized tech- and finance-oriented coasts. There are conservative, free-market red states vs. liberal, regulation-minded blue states. And there are lawmakers who, surveying this landscape littered with political land mines, would like nothing better than to kick the auto industry can down the road for President-elect Barack Obama to deal with.

Caught somewhere in the middle is Senator Bob Corker (R-Tenn.), who won a highly publicized election in 2006 against then-Representative Harold Ford Jr. (D-Tenn.). Freshman senators don't typically have much influence or voice in the Senate. But to some observers, Corker—who in the past has been a union-card-carrying construction worker, owner of a small business, and the mayor of Chattanooga, Tenn.—has distinguished himself in the bailout debate by immersing himself in research, data, and arguments that go beyond the easy pro and con positions. He has been instrumental in moving the loan package forward while grilling the CEOs of General Motors (GM), Ford (F), and Chrysler and toughening up the conditions for a rescue (BusinessWeek.com, 12/9/08). Senate Banking Committee Chairman Christopher Dodd (D-Conn.) singled out Corker at the Dec. 4 hearing with the CEOs as a "workhorse" on the committee and "invaluable."

Corker is uniquely positioned in the debate. Tennessee is the only state in the union that is home to U.S., Asian, and European auto assembly plants: a unionized GM factory in Spring Hill, Tenn., that once built Saturns (and hosted the annual cult-like Saturn owner gatherings) and now makes the Chevy Traverse crossover vehicle; a nonunion plant owned by Nissan (NSANY), which has its U.S. headquarters in Nashville; and a Volkswagen (VOWG) plant that's under construction near Chattanooga. That VW plant will be the first the company has opened in the U.S. since it closed a Pennsylvania assembly factory in the 1980s. The state is also home to numerous auto suppliers that feed parts to GM, Nissan, and other automakers with operations in the South.

Whereas many of his colleagues have staked out firm positions on one side or the other of the debate, Corker has been harder to pin down as pro- or anti-bailout. In a nearly hour-long conversation with BusinessWeek Senior Correspondent David Kiley, Corker seemed to lean toward a loan package, but with the option of forcing the companies into Chapter 11 bankruptcy if specific sacrifices can't be wrung out of labor and bondholders. Here is an edited version of their conversation:

How much of the opposition in the Senate to a loan package has to do with local politics? In Alabama, you have transplants and no Detroit Three presence; Senator Richard Shelby (R-Ala.), the ranking Republican, has had a lot more airtime than you. And then there are representatives and senators with bailout-fatigued constituents who don't buy American cars and have no Detroit factories in their backyards.

It has not been an issue of local politics. For me there is no issue of local politics. I try and dig into these issues and present thoughtful responses to the situation. In defense of Senator Shelby, I knew where he was going to be on this issue before this ever arose. He was against the Chrysler loans back in 1979. He was always going to be against this, as he was against the Wall Street bailout legislation. In his case, it's not the politics of the auto industry. That's just who he is. And the people of Alabama seem to support where he is. He was taken out of the negotiations on both bailouts because he is just flat-out against this kind of intervention. He has been consistent on that.

What are your constituents telling you? You have a mixed bag of GM, Nissan, and now Volkswagen in your state.

I want to say that I have been getting to know [GM CEO] Rick Wagoner, [Ford CEO] Alan Mulally, and [Chrysler CEO] Bob Nardelli, and these are good people with good ideas. And even though my views seem to be very much at odds with [UAW chief] Ron Gettelfinger's, I really appreciate his testimony. The ones I know the best and am hearing from the most, I'd say, are dealers. I just talked to one dealer last weekend who is representative: He's a civic leader. He is so stressed out that it's like talking to someone on speed.

The problem is they have no one coming in to buy cars. Regardless of what happens this week, the legislation, if passed, is not going to move people to buy cars. The dealers are calling me and saying, "We hope these guys survive," but they also tell me not to let them off the hook. "Keep doing what you are doing," they say. "Make them really adopt reforms that will fix the problems for good." These are the guys at the end of the food chain. They have their life's net worth tied up in these businesses. If their businesses fail, many will have to file personal bankruptcy. They don't have recourse like the automaker CEOs.