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Obama to set up auto task force, drops car czar idea
Source: Agencies |
February 16, 2009, Monday
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US President Barack Obama has decided to launch a government task force for restructuring the struggling US auto industry instead of naming a "car czar" with sweeping powers, a senior administration official said yesterday.
Obama is appointing Treasury Secretary Timothy Geithner as his "designee" for overseeing auto bailout loans and as co-head of the new high-level panel together with White House economic adviser Lawrence Summers, the official said.
But Obama, who took office on Jan. 20 and last week won congressional approval of a US$787 billion economic stimulus program, has dropped the idea of having a single appointee empowered to handle the politically sensitive task of revamping America's once-mighty auto sector.
"There is no 'car czar,'" the official said, speaking on condition of anonymity.
There was no immediate word on when or how Obama, due to return to Washington on Monday after spending the long Presidents Day holiday weekend back home in Chicago, planned to unveil his strategy for dealing with the auto crisis.
But General Motors Corp and Chrysler LLC, are required to submit new turnaround plans by Tuesday showing how they can be made viable after receiving US$13.4 billion in emergency aid in the final weeks of the Bush administration.
The clock was ticking on crucial talks between GM and the United Auto Workers, which resumed on Sunday after negotiations had broken off. If GM cannot win deals to cut debt and costs, the automaker would be left reliant on an expanded bailout from the Obama administration or forced to consider bankruptcy.
Obama, in an interview with regional newspapers last week, said the federal government may offer more help to ailing automakers if they show they can be commercially viable. He cautioned the companies needed to submit realistic plans.
It had been widely known that Obama was considering naming a high-profile car czar -- in fact, some critics had said the delay added uncertainty about the industry's prospects amid the worst US financial crisis in decades.
While there was no immediate explanation why the idea was abandoned, Obama's approach will leave the auto industry overhaul in the hands of his closest economic advisers.
The administration official who disclosed Obama's plans said the automakers were expected to submit their restructuring proposals on time and that government teams were working to help resolve remaining issues.
"Once received, we will analyze the reports and over the course of the next week or two will meet with the companies to work through them," the official added. Automakers and their stakeholders will be expected to show progress in meeting their restructuring goals by month's end.
PRESIDENTIAL TASK FORCE
The new panel, the Presidential Task Force on Autos, will be drawn from across the government, including the departments of Treasury, Labor, Transportation, Commerce and Energy, and will be overseen by Geithner and Summers, the official said.
Geithner's duties are being expanded despite facing heavy criticism for failing to offer many specifics in his recent announcement of the administration's highly anticipated bank rescue strategy.
Adding another wrinkle to the auto oversight plan was the choice of Ron Bloom, a restructuring expert with investment banking experience who has has advised labor unions, as senior adviser to Treasury on the auto crisis.
GM welcomed the creation of the new panel, saying, "We expect to meet soon with this team to share GM's detailed restructuring plan to restore our company to viability and to meet the requirements of its loan agreements."
Chrysler had no immediate comment.
Union negotiators who had walked away from the bargaining table on Friday over differences with GM over the central issue of how to fund retiree health-care costs were back at the table on Sunday, according to a source briefed on the situation.
It was unclear if any agreement could be reached by Tuesday's deadline for submitting restructuring plans.
Meanwhile, GM and a committee of its bondholders were locked in high-stake talks aimed at reducing debt at the struggling automaker by about US$18 billion.
GM spokesman Steve Harris said the automaker's board would convene on a conference call on Monday to review a draft of the restructuring plan although work on it was likely to continue right up until the deadline for submission.
Both GM and Chrysler have said they expect to meet cost-cutting targets set out under the government bailout, which include making blue-collar labor costs competitive with Japanese automakers that operate factories in the Untied States. UAW representatives could not be reached for comment.
GM, Chrysler and Ford Motor Co have cut 250,000 jobs since the start of the decade and are looking to cut more.
Ford, which is seeking a US$9 billion line of credit from the US government, remains in talks with the UAW intended to secure any concessions granted to its rivals.
Obama is appointing Treasury Secretary Timothy Geithner as his "designee" for overseeing auto bailout loans and as co-head of the new high-level panel together with White House economic adviser Lawrence Summers, the official said.
But Obama, who took office on Jan. 20 and last week won congressional approval of a US$787 billion economic stimulus program, has dropped the idea of having a single appointee empowered to handle the politically sensitive task of revamping America's once-mighty auto sector.
"There is no 'car czar,'" the official said, speaking on condition of anonymity.
There was no immediate word on when or how Obama, due to return to Washington on Monday after spending the long Presidents Day holiday weekend back home in Chicago, planned to unveil his strategy for dealing with the auto crisis.
But General Motors Corp and Chrysler LLC, are required to submit new turnaround plans by Tuesday showing how they can be made viable after receiving US$13.4 billion in emergency aid in the final weeks of the Bush administration.
The clock was ticking on crucial talks between GM and the United Auto Workers, which resumed on Sunday after negotiations had broken off. If GM cannot win deals to cut debt and costs, the automaker would be left reliant on an expanded bailout from the Obama administration or forced to consider bankruptcy.
Obama, in an interview with regional newspapers last week, said the federal government may offer more help to ailing automakers if they show they can be commercially viable. He cautioned the companies needed to submit realistic plans.
It had been widely known that Obama was considering naming a high-profile car czar -- in fact, some critics had said the delay added uncertainty about the industry's prospects amid the worst US financial crisis in decades.
While there was no immediate explanation why the idea was abandoned, Obama's approach will leave the auto industry overhaul in the hands of his closest economic advisers.
The administration official who disclosed Obama's plans said the automakers were expected to submit their restructuring proposals on time and that government teams were working to help resolve remaining issues.
"Once received, we will analyze the reports and over the course of the next week or two will meet with the companies to work through them," the official added. Automakers and their stakeholders will be expected to show progress in meeting their restructuring goals by month's end.
PRESIDENTIAL TASK FORCE
The new panel, the Presidential Task Force on Autos, will be drawn from across the government, including the departments of Treasury, Labor, Transportation, Commerce and Energy, and will be overseen by Geithner and Summers, the official said.
Geithner's duties are being expanded despite facing heavy criticism for failing to offer many specifics in his recent announcement of the administration's highly anticipated bank rescue strategy.
Adding another wrinkle to the auto oversight plan was the choice of Ron Bloom, a restructuring expert with investment banking experience who has has advised labor unions, as senior adviser to Treasury on the auto crisis.
GM welcomed the creation of the new panel, saying, "We expect to meet soon with this team to share GM's detailed restructuring plan to restore our company to viability and to meet the requirements of its loan agreements."
Chrysler had no immediate comment.
Union negotiators who had walked away from the bargaining table on Friday over differences with GM over the central issue of how to fund retiree health-care costs were back at the table on Sunday, according to a source briefed on the situation.
It was unclear if any agreement could be reached by Tuesday's deadline for submitting restructuring plans.
Meanwhile, GM and a committee of its bondholders were locked in high-stake talks aimed at reducing debt at the struggling automaker by about US$18 billion.
GM spokesman Steve Harris said the automaker's board would convene on a conference call on Monday to review a draft of the restructuring plan although work on it was likely to continue right up until the deadline for submission.
Both GM and Chrysler have said they expect to meet cost-cutting targets set out under the government bailout, which include making blue-collar labor costs competitive with Japanese automakers that operate factories in the Untied States. UAW representatives could not be reached for comment.
GM, Chrysler and Ford Motor Co have cut 250,000 jobs since the start of the decade and are looking to cut more.
Ford, which is seeking a US$9 billion line of credit from the US government, remains in talks with the UAW intended to secure any concessions granted to its rivals.
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