If a “car czar” is appointed to oversee federal bridge loans to struggling Detroit auto makers, he or she will be met with open arms and a steep learning curve, industry insiders say.
David Cole, chairman of the Michigan-based Center for Automotive Research, suggests Detroit can only gain if an outsider becomes privy to the inner workings ofCorp., Motor Co. and LLC. That will allow the financial-aid discussion to “get past the hype and get into the serious issues.”
Cole cringes at the “abysmal” level of insight displayed about the industry to date, a sentiment echoed by GM Vice Chairman Bob Lutz. The auto maker’s product-development chief tells CBS Radio he welcomes the prospect of Congressional oversight, because then lawmakers will learn of the domestic industry’s challenges “from the inside.”
The United Auto Workers union also is on board. Its website features a posting that declares support for tying aid to “tough conditions,” including oversight.
Kenneth Feinberg, a prominent lawyer who oversaw the compensation fund established for victims of the 9/11 terrorist attacks, widely is reported as a front-runner for the position.
He has not been offered the job, says Camille Biros, spokeswoman for Feinberg’s Washington law office. But the Congressional office is “obviously talking about him,” she tells Ward’s.
Detailed speculation about bridge-loan implementation is beginning to leak out of Washington as lawmakers inch toward a bicameral solution that satisfies the White House. But House Speaker Nancy Pelosi (D-CA) promises a deal “very soon” that will make $15 billion available for GM and.
is more interested in a long-term line of credit and is not seeking a short-term loan. But the auto maker is supporting the bids by its competitors “as our industry is highly interdependent, and a failure of one of our competitors could affect us all.”
The establishment of a car czar, a presidential appointee, is among the contentious issues. The position is not an element of the $15 billion package but remains on the table for the next round of talks which are expected to intensify after the Obama Admin. takes office Jan. 20.
Detroit auto makers are seeking $34 billion in emergency aid and credit guarantees.
Washington insiders tell Ward’s there was concern as late as Monday evening that the proposed czar’s powers will be too broad and could serve as an impediment to the development of genuinely viable business plans. Advocates for Detroit auto makers would prefer to see these powers limited to financial oversight.
Cole is confident that common sense will prevail. Expect any appointee to conduct a “deep dive” into the industry. “Because right now, Congress (doesn’t) have a clue,” he says, adding a car czar’s role likely will be limited to financial oversight.
But how much will that extend to key operational elements of an auto maker’s business such as product planning? “Not much,” says Cole, who takes himself out of the running as car czar candidate. “I’m too old and too opinionated.”
GM issued a statement regarding the progress toward making the $15 billion loan available this year.
“We will abide by the conditions proposed in the bill and will continue our restructuring with great urgency,” the auto maker says. “Millions of jobs, America’s manufacturing base and future competitiveness hang in the balance, and we urge quick passage of this bill.”
Opposition remains in some corners of Capitol Hill. Sen. Jeff Sessions (R-AL) said he would rather see the auto makers go bankrupt than make taxpayer money available to them.
“I’m just amazed that we’re not going in that direction,” Sessions told the Senate, recalling how Delta Airlines filed for Chapter 11 in 2005.
“They didn’t disappear,” Sessions said Monday. “They didn’t lay off all their workers.”
Earlier this year, Delta bought rival Northwest Airlines to form the world’s largest air carrier.
– with James M. Amend