New US president Obama won’t appoint a single, powerful “car czar” to oversee the revamping of General Motors and Chrysler, as originally thought, and will instead keep the politically delicate task in the hands of his most senior economic advisers, US reports at the weekend said.
Anonymous officials told The New York Times (NYT) and Wall Street Journal (WSJ), among others, that Obama instead was designating treasury secretary Timothy Geithner and National Economic Council chairman Lawrence Summers to oversee a presidential panel on the auto industry.
Geithner would also supervise the US$17.4bn in loan agreements already in place with GM and Chrysler, an anonymous official told the NYT, adding that Ron Bloom, a restructuring expert who has advised the labour unions in the troubled steel and airline industries, would be named a senior treasury adviser on the auto crisis.
The unexpected shift came just before both GM and Chrysler must file restructuring plans with the treasury tomorrow (17 February).
The administration official told the NYT Obama was reserving for himself any decision on the viability of GM and Chrysler, both of which came close to bankruptcy before receiving federal aid two months ago.
One of the president’s top advisers said on Sunday the administration had not ruled out a government-backed bankruptcy as a means to overhaul the automakers.
“We’re going to need a restructuring of these companies,” David Axelrod, said on NBC‘s “Meet the Press”. According to the NYT, he added that a turnaround of the companies would “require sacrifice not just from the auto workers but also from creditors, from shareholders and the executives who run the company.”
The NYT said automakers had been expecting the appointment of a car czar to break the logjam of negotiations with the United Auto Workers over the financing of a retiree health care trust, and with bondholders about reducing the companies’ debt.
The new presidential panel, the Presidential Task Force on Autos, would draw officials from several agencies including the departments of treasury, labour, transportation, commerce and energy, the administration official told the NYT, which added many members of the task force have already been working closely with GM and Chrysler on the viability plans they are preparing for the government.
GM said in a statement that it welcomed the new task force and that it looked forward to sharing its plan “to restore our company to viability and to meet the requirements of its loan agreements”.
The administration official who disclosed the change in Obama’s plans for oversight of the auto industry told the New York Times the group would review the companies’ submissions for a week or two before responding publicly. Until then, the auto makers were expected to continue talks with the union and other stakeholders.
On Sunday afternoon, GM and the UAW resumed discussions in Detroit about reducing the company’s labour costs, a person with direct knowledge of the talks told the paper. The UAW had walked away from the bargaining table late on Friday as the two sides clashed over how to cover retiree health care costs.