POLITICS

Government Insists On Oversight In New Auto Rescue Plan

01/07/2009 05:12 am ET | Updated May 25, 2011


UPDATE on 12/07 at 11:30PM:
And the New York Times highlights that Democrats are pushing for stronger federal control and oversight of the auto industry, pointing out that the Bush-Obama transition is complicating the discussions:

Congressional Democrats on Sunday were weighing options for tight government control of the crippled American auto industry, including the possible creation of an oversight board made up of five cabinet secretaries and the head of the Environmental Protection Agency, and led by an independent chairman or "car czar."

While the form of oversight was still being negotiated by Congressional Democrats and the White House late Sunday, the talks made clear the extent to which the auto companies would have to submit to substantial government supervision in order to receive a taxpayer-financed bailout.

Whatever oversight entity is created, it would direct the drastic reorganization plans that the auto companies have said they were willing to undertake in exchange for billions of dollars in short-term government loans to keep them in business, according to a senior Congressional aide. A main factor complicating the deliberations was the imminent transition between the Bush and Obama administrations.

UPDATE on 12/07 at 11:22PM: The Washington Post adds that part of the plan could include forcing GM, Chrysler and Ford to oust their top executives:

Congressional Democrats are drafting legislation that would give the teetering Detroit automakers at least $15 billion in emergency loans early next week and grant the federal government broad authority to manage a massive restructuring of their operations.

The proposal, which could be put to a vote in Congress as soon as tomorrow, would establish a seven-member "auto board" of Cabinet officials and a chairman to be appointed by President Bush to oversee both the short-term loans and a long-term effort to restore the faltering industry to profitability. If the companies take the cash, they would be accountable to the government for nearly every move, and for every transaction of $25 million or more.

As part of that restructuring, General Motors, Chrysler and Ford could be asked to jettison their top executives, one of the chief architects of the plan, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), said yesterday. Stating bluntly that "GM is in the worst shape" of the three auto giants, Dodd said that GM chairman G. Richard Wagoner Jr., the company's chief since 2000, "has to move on."

Throughout the weekend, Congressional negotiators and their White House counterparts tried to iron out their differences and reach an agreement on the specifics of a plan to bail out the Big Three of the automotive industry:

Reuters reports:

White House and congressional negotiators sought on Sunday to remove remaining differences over an emergency rescue for the struggling auto industry, a stark symbol of the deepening U.S. economic crisis.

Prodded by shock unemployment figures which showed the country shed more than half a million jobs in November alone, negotiators tried to forge an agreement in principle to provide "The Big Three" American automakers with at least $15 billion in short-term loans.

The Senate is due back in session on Monday and negotiators hope to have a package ready that can be quickly approved and sent to President George W. Bush as one of the last measures he signs into law before Democrat Barack Obama succeeds him as president on January 20.

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