CQ TODAY ONLINE NEWS
– ECONOMIC AFFAIRS
Updated May 22, 2009 – 6:00 p.m.
Lawmakers Want Greater Role in Auto Restructuring
By Joseph J. Schatz, CQ Staff
After watching for months from the sidelines as the Obama administration steered Chrysler LLC into bankruptcy and General Motors Corp. into a painful restructuring, lawmakers are seeking a greater role in blunting the impact of the industry’s restructuring on dealers, communities and bondholders.
On Friday, a group of 36 House members called the actions of the White House auto industry task force “more than troubling,” in a letter they sent to President Obama. The letter’s signers were mostly Republicans, but several prominent Democrats also put their names on it.
The effort, which included a meeting with a member of the task force, was headed by Republican Steven C. LaTourette and Democrat Dennis J. Kucinich , both of Ohio. Powerful Michigan Democrat John Conyers Jr. also took part.
LaTourette complained that the task force lacked transparency and was not responsive to Congress’ concerns. “Dodge pioneered the Stealth car, and I fear that’s been the motto in this process,” he said.
In recent days, lawmakers also have moved to give affected car dealers more time to wind down their operations, and to boost demand for Detroit’s products.
Congress ceded much of its influence over the automakers’ fate back in December, when Senate talks over a House-passed bailout of the two companies collapsed, leading the Bush administration to step in and use federal bailout funds to keep them alive.
Earlier this year, the Obama administration announced that the two companies’ restructuring plans were inadequate, and pushed Chrysler into bankruptcy with a promise of additional federal aid as it restructures. GM appears likely headed toward bankruptcy as well, in tandem with billions in federal aid.
Increasingly, the upheaval at both companies is causing uncertainty for communities — and the lawmakers who represent them — that are reliant on auto plants and auto dealers, especially in the Rust Belt and surrounding states.
This week, Sen. Kay Bailey Hutchison , R-Texas, attempted to use the war-funding supplemental (
Hutchison told the Senate on Thursday she was not “trying to reach into Chrysler’s decisions that they have made that will shut down these dealerships. We are just asking for three more weeks to let them shut down in, hopefully, a little bit better situation. Let them get some help to know what they have to do and to sell all the parts, all the equipment, and try to get their financial arrangements in order.”
Hutchison said the extra time would help the surviving dealerships as well, “because, hopefully, they are going to buy some of this equipment, and they will need financing to do that as well.”
The amendment was not included in the final bill, but Hutchison and Michigan Democratic Sen. Debbie Stabenow , D-Mich., secured assurances from Chrysler President James Press that dealers “will receive a fair and equitable value for virtually all of their outstanding vehicles and parts inventory.”
“Thanks to your input today we have added a new set of assurances and information for the . . . dealers with the intention of removing some of the uncertainty that naturally surrounds this process,” Press said in a letter to Hutchison.
According to Hutchison, the Senate Commerce Committee, on which she is the ranking Republican, will hold a hearing June 2 on how the auto companies’ restructuring is affecting consumers and dealers.
In a letter Friday, Hutchison and panel Chairman John D. Rockefeller, D-W.Va., told the chief executive officers of Chrysler and GM that they will be asked to testify on steps they are taking to assist affected dealers and minimize job losses.
‘Cash for Clunkers,’ Bondholders
The climate change bill (
Meanwhile, Sen. Debbie Stabenow , D-Mich., introduced a Senate version (
Sen. Dianne Feinstein , D-Calif., and others in the Senate have proposed an alternative “cash for clunkers” plan that would make fewer vehicles eligible for trade-in than the Sutton amendment. It also would require new cars to meet higher fuel economy standards to be elilgible for the maximum voucher. The Feinstein proposal is likely to be favored by environmental groups.
Lawmakers are also scrutinizing how the Obama administration is handling the industry restructuring, with many Republicans complaining that it violates long-held principles of bankruptcy law.
A small group of Republicans — including Minority Whip Eric Cantor , R-Va., and Jeb Hensarling , R-Texas — complained in a letter Friday to Treasury Secretary Timothy F. Geithner that the administration’s emerging plan for structuring GM unfairly favors the United Auto Workers union over GM’s bondholders.
“Investors in General Motors relied upon rules inherent in the U.S. bankruptcy code that define the rights of creditors in the event of a default or a bankruptcy filing,” the lawmakers wrote. “The government’s proposed reorganization of the company appears to subvert these rules to arrive at a politically motivated solution in the name of reviving the company.”
First posted May 22, 2009 12:26 p.m.




Comments
If CONGRESS gets involved the auto efforts will fail. I hope the PRESIDENT is clear that HE is running this show. Congress will just bow to the influence of the auto lobby like they did with Bankruptcy issues. When Congress gets an approval rating at that of the President, then they can ask to have a voice, or perhaps a seat at the table.
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