Members of the Senate Banking Committee yesterday expressed considerable skepticism about the administration's plan to aid Chrysler Corp. as the panel opened six days of hearings into the bailout scheme.
Only Sen. Donald W. Riegle (D-Mich.), the plan's leading advocate, expressed total support for the legislation, which would provide a $1.5 billion loan guarantee for the struggling automobile manufacturer.
The strongest criticism of the plan came from Sen. William Proxmire (D-Wis.), committee chairman, who said Congress was being asked to play a "deaf, dumb and blind Santa Claus."
Nevertheless, Treasury Secretary G. William Miller predicted Congress would pass the Chrysler aid bill before the end of the year.
Meanwhile, the House Banking Committee passed an amendment yesterday to the Chrysler legislation that would force the company to demonstrate to the Treasury Department that it plans to produce fuel-efficient cars.
The amendment, sponsored by the House committee's chairman, Rep. Henry Reuss (D-Wis.), also would permit financial assistance to other companies who are willing to produce energy-saving vehicles at factories that Chrysler will abandon.
The amendment, which has the support of the Carter administration, passed the committee by a 30-7 vote. The committee will continue marking up the bill this week.
Proxmire, who already has set Nov. 29 as the start of the Senate panel's mark-up of the bill, said the committee is under "strong pressure" to act quickly on the bill" even though there is no real evidence" that Chrysler will collapse without enactment of the scheme by the end of the year.
Proxmire expressed concern that providing the guarantee for Chrysler will encourage other struggling companies to follow the same path.
"We let 7,000 companies fail last year; we didn't bail them out," he said. "Now we are being told that if a company is big enough, if it's the tenth largest corporation in the country, we can't let it go under. Then how big is big enough to not be allowed to fail?"
Proxmire warned that if Chrysler gets government backing while other auto manufacturers borrow money at 15 percent interest, "we may well have Ford at our doorsteps tomorrow.
"Under the circumstances, there is no way we could avoid giving aid to Ford as well," he said. "I think we need to realize that the potential consequences of our actions here for the industry and for the economy are immense."
Sen. Jake Garn (R-Utah) likened the Chrysler situation to that of New York City. "I am particularly skeptical of the administration's assurances that a Chrysler loan guarantee program with all of the caveats included in the New York financial aid legislation will be successful," he said.
Garn said he is "philosophically opposed to government bailouts of businesses," although he noted the consequences for government spending of a Chrysler collapse. The Treasury Department has estimated that a Chrysler failure would cost the government $2.75 billion in 1980 and 1981.
Sen. John Heinz (R-Pa.) said he has "profound reservations" about the administration plan, citing a windfall for the company's stockholders that he said would follow federal aid.
"The shareholders have to do their part too," Heinz said.
Sen. Robert Morgan (D-N.C.) aslo expressed doubts about the Chrysler program, wondering if it would set a precedent for other companies in serious trouble.
But Riegle and two senators not on the banking panel, Carl Levin (D-Mich.) and Birch Bayh (D-Ind). backed the Chrysler proposal, citing the unemployment and related economic effects that their states would suffer if the automaker faced bankruptcy.
Miller, whose presentation to the committee echoed testimony presented earlier to the House committee, denied that the government would face a substantial risk in backing the Chrysler loans.
The program calls for the company to raise through private investment sources $1.5 billion, and Miller told reporters that there is a "reasonable prospect" that the money would be raised.
Miller said the company could sell real estate holdings, some stock and foreign businesses as a part of the fund-raising plan.
Facing the questioning of Proxmire, Miller insisted that the government is not "looking at this through rose-colored glasses" and emphasized that Chrysler's future plans to increase its market share in the industry through smaller vehicles appears in line with auto-buying patterns.