WASHINGTON – House Speaker Nancy Pelosi touted the notion of a 'car czar' to supervise an auto industry bailout, saying Tuesday that Big Three executives haven't adapted well to changing conditions.
As United Auto Workers President Ron Gettelfinger voiced fresh confidence that an accommodation will be reached on a $15 billion bailout bill, Pelosi told interviewers it's more critical than ever that change in Detroit be forced.
"I think it's very important," Pelosi told NBC's "Today" show, because little would be accomplished if company executives are "left to their own devices."
Pelosi appeared on morning television after a night of intense Capitol Hill discussions aimed at narrowing differences on legislation to rush short-term loans to the struggling carmakers. The plan would require that the industry reinvent itself to survive — and that it pay back the government if it doesn't. The package could come to a vote as early as Wednesday.
Pelosi said she thought taxpayers should consider it "a second chance" for the industry, rather than a bailout.
Cash from any such rescue plan would immediately be plowed into General Motors Corp. and Chrsyler LLC. Ford Motor Co. has said that it does not have an emergency cash-flow problem and that it would not ask for short-term assistance.
In testimony before Congress last week, General Motors and Chrysler, which have said they are weeks from collapse, made it clear they would need a total of $14 billion to $15 billion to survive through early 2009.
"We do not face a near-term liquidity issue, and we will not be seeking a short term bridge loan," the company said in a statement Monday night. "But Ford fully supports an effort to address the near-term liquidity issues of GM and Chrysler, as our industry is highly interdependent and a failure of one of our competitors could affect us."
Robert Lutz, GM's vice president of global product development, also said he could accept a federally appointed czar to supervise implementation of a restructuring plan.
"Well, whether we need it or not, I think it's reasonable that when the federal government steps in with taxpayer money, they're not going to--they're not going to lend us the money and just say, `Do the best you can with it and tell us when you need more.' Obviously, there's going to be some kind of oversight and I think that's a reasonable thing to expect," he said on CBS's "The Early Show."
He said the industry's chief problem involves "short-term liquidity" and said it crucial that the government revitalize the economy as well as steadying his industry.
The measure being discussed in Congress would put a government overseer named by President George W. Bush in charge of setting guidelines for an industrywide overhaul, with the power to revoke the loans if the automakers fail to do what's necessary to become viable. The White House was seeking tougher consequences, including allowing the overseer — being called a car czar — to force the companies into bankruptcy if they weren't doing enough to cut labor costs, restructure their debt and downsize to stay afloat.
Pelosi, D-Calif., said she had no candidates for the job, but said that Paul Volcker, a former Federal Reserve chairman and how an economic adviser to President-elect Barack Obama, would be a good choice. She said he enjoys the public's confidence.
Despite optimism on both sides that Congress and the White House could reach a swift agreement on the rescue package, it was still a tough sell on Capitol Hill. With lawmakers in both parties bitter over the administration's use of the $700 billion Wall Street bailout, many of them were preparing to hold their noses and vote for yet another federal rescue to avert deeper economic disaster.
"While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done," Senate Majority Leader Harry Reid, D-Nev., said. "This is no blank check or blind hope."
Gettelfinger, who appeared Tuesday on CBS, declined to say whether his union would demand a seat on GM's board of directors in exchange for contract concessions. But he did say that "if we're gonna be asked to give up more, and it appears that we are, then we should have an equity stake in the company."
Gettelfinger said in an interview with Detroit's WWJ-AM that the union is "hopeful that the Democrats and the White House can come to a compromise here very quickly."
The developing plan would dole out auto industry loans right away, drawing the money from an existing program meant to help the carmakers retool their factories to produce more fuel-efficient vehicles. Then the czar would write guidelines, due on the first of the year, for restructuring the companies.
The proposal would attach an array of conditions to the auto bailout money, including some of the same restrictions imposed on banks as part of the Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends, and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.
There also would be rigorous government oversight, with the special inspector general monitoring the Wall Street rescue also keeping tabs on the carmaker bailout. The Senate on Monday confirmed Neil M. Barofsky, a federal prosecutor in New York, to be the special inspector general.
The proposal gives the car czar say-so over any major business decisions by the automakers while they're taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more.
Also under discussion is a requirement that the carmakers taking federal aid get rid of their corporate jets — which became a potent symbol of the industry's ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government assistance.
Still, the White House wanted clearer consequences for the automakers if a company was not meeting its own promises for long-term viability, according to officials who would comment on the continuing negotiations only on condition of anonymity.
Under Democrat's proposal, if the Big Three didn't come up with suitable restructuring plans by the end of March, the czar would have to submit his own blueprint to Congress for a government-mandated overhaul.
Sen. Carl Levin, D-Mich., a key ally of the auto industry, said getting the roughly 15 Republicans needed to support the plan was an uphill battle.
"This is a real hill to climb even if we can get agreement between the White House and congressional leaders," he said.
Even sympathetic Republicans weren't ready to sign on. Sen. George Voinovich, R-Ohio, has "numerous concerns" about the bill, including the strength of the taxpayer protections and the role of the car czar, said spokesman Chris Paulitz.