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Senate Banking Hearing Second Guesses Auto Task Force. Wants to Know What the Exit Strategy Is?

Obama Administration is under attack for its deficit spending, dealer closings, and the creation of "Government Motors."

by on Jun.11, 2009

Senator Dodd

"How do we get paid back?"

In a hearing yesterday with the usual, large, degree of political posturing, the Senate Banking, Housing and Urban Affairs Committee took senior members of the Obama Administration to task for its handling of the collapse of Chrysler LLC and General Motors Corporation.

Senators from both sides of the aisle wanted to let voters know that they weren’t happy with the bailouts of Chrysler and GM, which — not coincidentally — are deeply unpopular with a clear majority of voters.

“The Auto Task Force must begin planning now for how to remove the government from the auto business,” said Senator Michael F. Bennet, a Democrat from Colorado.

This sentiment was repeated by the committee’s chairman, Connecticut Senator Christopher Dodd, also a Democrat, who is facing a strong re-election challenge because he allowed taxpayer funds to go for millions of dollars in bonuses to the financial speculators at failed AIG, which was part of the even more despised, if that’s possible, taxpayer bailouts for Wall Street plutocrats.

Senator Shelby

Shelby, to be fair, has consistently opposed taxpayer loans for domestic companies, unlike his colleagues.

Joining the “not at all happy about this parade” was Republican Richard Shelby, Alabama’s senior United States Senator, and Ranking Committee member, who has consistently opposed auto aid for domestic companies.

From the start Senator Bennet set the themes that echoed in the Dirksen hearing room all afternoon.

“I think an exit strategy from the auto industry ought to encompass three basic goals,” Bennet said: “One, seek to reform and repair the auto industry so it can compete in the long run; Two, get out as soon as is practicable; and, Three,  retrieve as much of the taxpayer investment as is practicable.”

Reluctant shareholders

Ron Bloom,left, and Ed Montgomery

"The government has no desire to own equity stakes in companies any longer than necessary."

The Obama Administration, no stranger itself to the art of posturing, clearly understood what it was facing in the hearing and its representatives came fully prepared to argue its case.

“The government has no desire to own equity stakes in companies any longer than necessary,” said Ron Bloom, senior advisor to the Auto Task Force, a cabinet level organization that is co-chaired by Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers. (more…)

Opinion: Is GM Turning Things Around?

Was decision to skip $2 billion in aid more than PR ploy?

by on Mar.16, 2009

Is GM's economic pulse showing signs of revival?

Is GM's economic pulse showing signs of revival?

In a stunning, surprise move, General Motors announced, last week, that it would not need a $2 billion infusion of cash from the federal government.  Ever since then, my phone has been ringing off the hook, with friends, industry contacts and talk show hosts alike asking me what this news signifies.

In today’s 24/7 news cycle, the issue is proving to have plenty of “legs,” and when I was asked to comment on NPR, this evening, I thought it time to stop giving glib opinions and think more deeply about the meaning of impact of GM’s decision.

The most common question is why did GM decide to skip this tranche of aid?  According to the automaker, it has made far more progress than it originally anticipated slashing its costs and rebuilding its under-funded war chest.  Certainly, if the company has enough cash on hand to meet its obligations, it would seem logical to avoid borrowing still more money and running its huge debt load even higher.

But Is GM really that much ahead of where it expected to be right now? (more…)