Pat Dollard

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Pelosi: “car czar” could be named this week, Volcker eyed

WASHINGTON – A presidentially appointed “car czar” to oversee the restructuring of struggling U.S. automakers could be named as soon as this week if Congress approves an industry bailout, House of Representatives Speaker Nancy Pelosi said in an interview aired on Tuesday.

Pelosi told NBC’s “Today Show” that she favored former Federal Reserve Chairman Paul Volcker, recently appointed by President-elect Barack Obama as his top adviser on steering the economy out of recession, to oversee restructuring of the industry.

Democrats and the White House are negotiating a bailout package of up to $15 billion in loans to rescue the Detroit Three companies. The final plan must be approved by Congress.

General Motors Corp, Ford Motor Co and Chrysler LLC submitted business plans to Congress last week seeking a bailout.

In the interview taped on Monday, Pelosi said the “car czar,” who will chair a board charged with making sure the automakers retool, should be proactive rather than simply overseeing the bailout plan.

“I would want the czar to be appointed before one dollar was spent … so theoretically this week,” she said.

“I think somebody like Paul Volcker, who has bipartisan confidence and the public and private confidence,” the Democratic leader said, when asked who she had in mind for the post.

Any appointment would be dependent on the bailout bill being passed by Congress this week.

Pelosi also said she expected the House to vote in the first week of January on a stimulus package to jolt the economy out of recession. Obama takes office on January 20.
(Reuters)

Republican senators are threatening to filibuster the auto bailout deal if their concerns are not met.

(FOX)

A small group of Republican senators is threatening to filibuster any auto industry bailout deal if their concerns are not addressed in it, FOX News has learned.

A Senate Republican aide, speaking on condition of anonymity, told FOX News that the senators are “very skeptical” that an acceptable deal will be reached and said they were strongly considering a filibuster — which would delay any resolution.

House Speaker Nancy Pelosi, however, touted the notion of a “car czar” to supervise the auto bailout, telling interviewers it was critical that a deal be reached.

“I think it’s very important,” Pelosi, D-Calif., told NBC’s “Today” show on Tuesday. She maintained little would be accomplished if company executives were “left to their own devices.”

Pelosi appeared on morning television after a night of intense Capitol Hill discussions aimed at narrowing differences on legislation to rush short-term loans to the struggling carmakers. The plan would require that the industry reinvent itself to survive — and that it pay back the government if it doesn’t. The package could come to a vote as early as Wednesday.

Pelosi said she thought taxpayers should consider it “a second chance” for the industry, rather than a bailout.

House Financial Services Committee Chairman Barney Frank said he was “optimistic” that a final auto agreement would be reached on Wednesday. He also told FOX News that it would be advantageous if the House were to vote first.

“The last time they (the Senate) went first is where we got stuck with wooden arrows and tax breaks,” he said.

Cash from any such rescue plan would immediately be plowed into General Motors Corp. and Chrsyler LLC. Ford Motor Co. has said that it does not have an emergency cash-flow problem and that it would not ask for short-term assistance.

In testimony before Congress last week, General Motors and Chrysler, which have said they are weeks from collapse, made it clear they would need a total of $14 billion to $15 billion to survive through early 2009.

“We do not face a near-term liquidity issue, and we will not be seeking a short term bridge loan,” the company said in a statement Monday night. “But Ford fully supports an effort to address the near-term liquidity issues of GM and Chrysler, as our industry is highly interdependent and a failure of one of our competitors could affect us.”

Robert Lutz, GM’s vice president of global product development, also said he could accept a federally appointed czar to supervise implementation of a restructuring plan.

“Well, whether we need it or not, I think it’s reasonable that when the federal government steps in with taxpayer money, they’re not going to–they’re not going to lend us the money and just say, `Do the best you can with it and tell us when you need more.’ Obviously, there’s going to be some kind of oversight and I think that’s a reasonable thing to expect,” he said on CBS’s “The Early Show.”

The measure being discussed in Congress would put a government overseer named by President George W. Bush in charge of setting guidelines for an industrywide overhaul, with the power to revoke the loans if the automakers fail to do what’s necessary to become viable. The White House was seeking tougher consequences, including allowing the overseer — being called a car czar — to force the companies into bankruptcy if they weren’t doing enough to cut labor costs, restructure their debt and downsize to stay afloat.

Pelosi said she had no candidates for the job, but said that Paul Volcker, a former Federal Reserve chairman and now an economic adviser to President-elect Barack Obama, would be a good choice. She said he enjoys the public’s confidence.

Despite optimism on both sides that Congress and the White House could reach a swift agreement on the rescue package, it was still a tough sell on Capitol Hill. With lawmakers in both parties bitter over the administration’s use of the $700 billion Wall Street bailout, many of them were preparing to hold their noses and vote for yet another federal rescue to avert deeper economic disaster.

“While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done,” Senate Majority Leader Harry Reid, D-Nev., said. “This is no blank check or blind hope.”

Gettelfinger, who appeared Tuesday on CBS, declined to say whether his union would demand a seat on GM’s board of directors in exchange for contract concessions. But he did say that “if we’re gonna be asked to give up more, and it appears that we are, then we should have an equity stake in the company.”

The developing plan would dole out auto industry loans right away, drawing the money from an existing program meant to help the carmakers retool their factories to produce more fuel-efficient vehicles. Then the czar would write guidelines, due on the first of the year, for restructuring the companies.

The proposal would attach an array of conditions to the auto bailout money, including some of the same restrictions imposed on banks as part of the Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends, and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.

The proposal gives the car czar say-so over any major business decisions by the automakers while they’re taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more.

Also under discussion is a requirement that the carmakers taking federal aid get rid of their corporate jets — which became a potent symbol of the industry’s ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government assistance.

Still, the White House wanted clearer consequences for the automakers if a company was not meeting its own promises for long-term viability, according to officials who would comment on the continuing negotiations only on condition of anonymity.

Under Democrat’s proposal, if the Big Three didn’t come up with suitable restructuring plans by the end of March, the czar would have to submit his own blueprint to Congress for a government-mandated overhaul.

Sen. Carl Levin, D-Mich., a key ally of the auto industry, said getting the roughly 15 Republicans needed to support the plan was an uphill battle.

“This is a real hill to climb even if we can get agreement between the White House and congressional leaders,” he said.

Me: So, where does this “idea” come from for a “Car Czar” and the government take-over of an American privately owned industry?

Well, one of the last remaining Communist power-players, of course:

Washington Takes Risks With Its Auto Bailout Plans

By DAVID E. SANGER – (NYTimes)

WASHINGTON — When President-elect Barack Obama talked on Sunday about realigning the American automobile industry he was quick to offer a caution, lest he sound more like the incoming leader of France, or perhaps Japan.

“We don’t want government to run companies,” Mr. Obama told Tom Brokaw on “Meet the Press.” “Generally, government historically hasn’t done that very well.”

But what Mr. Obama went on to describe was a long-term bailout that would be conditioned on federal oversight. It could mean that the government would mandate, or at least heavily influence, what kind of cars companies make, what mileage and environmental standards they must meet and what large investments they are permitted to make — to recreate an industry that Mr. Obama said “actually works, that actually functions.”

It all sounds perilously close to a word that no one in Mr. Obama’s camp wants to be caught uttering: nationalization.

Not since Harry Truman seized America’s steel mills in 1952 rather than allow a strike to imperil the conduct of the Korean War has Washington toyed with nationalization, or its functional equivalent, on this kind of scale. Mr. Obama may be thinking what Mr. Truman told his staff: “The president has the power to keep the country from going to hell.” (The Supreme Court thought differently and forced Mr. Truman to relinquish control.)

The fact that there is so little protest in the air now — certainly less than Mr. Truman heard — reflects the desperation of the moment. But it is a strategy fraught with risks.

The first, of course, is the one the president-elect himself highlighted. Government’s record as a corporate manager is miserable, which is why the world has been on a three-decade-long privatization kick, turning national railroads, national airlines and national defense industries into private companies.

The second risk is that if the effort fails, and the American car companies collapse or are auctioned off in pieces to foreign competitors, taxpayers may lose the billions about to be spent.

And the third risk — one barely discussed so far — is that in trying to save the nation’s carmakers, the United States is violating at least the spirit of what it has preached around the world for two decades. The United States has demanded that nations treat American companies on their soil the same way they treat their home-grown industries, a concept called “national treatment.”

Yet so far, there is no talk of offering aid to Toyota, Honda, BMW or the other foreign automakers that have built factories on American soil, employed American workers and managed to make a profit doing so.

“If Japan was doing this, we’d be threatening billions of dollars in retaliation,” said Jeffrey Garten, a professor at the Yale School of Management, who as under secretary of commerce in the 1990s was one of many government officials who tried in vain to get Detroit prepared for a world of international competition. “In fact, when they did something a lot more subtle, we threatened exactly that,” referring to calls for import restrictions.

Mr. Garten said he was stunned by the scope of the intervention that Washington was now considering. “I don’t know that we’ve seen anything like this since the government told the automakers what kind of tanks to make during World War II,” he said. “And that was just for the duration of the war — this could be for much, much longer.”

It is hard to measure just what kind of chances Mr. Obama may be taking with this plan, in part because so many parts of it are still in motion.

In the short term, Democrats are floating the idea of linking $15 billion in immediate loans to the designation of a “car czar” who, in doling out the money, could require or veto big transactions or investments — essentially a one-man board of directors. The White House indicates that President Bush, who has spent his entire presidency proclaiming that the government’s role is to create an environment that spurs free enterprise and minimizes government regulation, would very likely sign the rescue plan.

The first $15 billion and the car czar who oversees it, however, are only the beginning. “After that, we’re in uncharted water,” said Malcolm S. Salter, a professor emeritus at Harvard Business School who has studied the auto industry for two decades and, until a few years ago, was an adviser to General Motors and Ford. “Think about this: Who in the federal government would have the tremendous insight needed to fix this industry?”

Depending on how the longer-term revamping of the industry proceeds, Washington could become a major shareholder in the Big Three, it could provide loans, or, in one course that Mr. Obama seemed to hint at on Sunday, it could organize what amounts to a “structured bankruptcy.” In that case, the government would convene the creditors, the unions, the shareholders and the company’s management, and apportion a share of the hit to each of them. If that “consensus building” sounds a lot like the role of the Japanese Ministry of International Trade and Industry in the 1970s and the 1980s, well, it is.

To promote the Japanese car industry on the way up, the trade ministry nudged companies toward consolidation, and even tried to mandate which parts of the market each could go into. (Soichiro Honda, the founder of the company, rebelled when bureaucrats told him he was supposed to limit himself to making motorcycles.) By the 1980s, Congress was denouncing this as “industrial policy,” and arguing that it put American makers at a competitive disadvantage — and polluted free enterprise.

Now, it is Congress doing exactly that, but this time as emergency surgery. Other nations will doubtless complain, or begin doing the same for their own companies. “We’re at this moment in history, in which the Chinese are touting that their system is better than ours” with their mix of capitalism and state control, said Mr. Garten, who has long experience in Asia. “And our response, it looks like, is to begin replicating what they’ve been doing.”