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Pelosi Likes Idea of 'Car Czar' to Audit Bailout

House Speaker Nancy Pelosi touted the notion of a "car czar" Tuesday to supervise an auto industry bailout, saying Big Three executives haven

Officials from the Big 3 Automakers testify in front of Congress.

WASHINGTON (AP) - House Speaker Nancy Pelosi touted the notion
of a "car czar" Tuesday to supervise an auto industry bailout,
saying 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, D-Calif., told NBC's
"Today" show. She maintained little would be accomplished if
company executives were "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."
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 said she had no candidates for the job, but said that
Paul Volcker, a former Federal Reserve chairman and now 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."
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.
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.
---
Associated Press writer Ben Feller contributed to this report.

(Copyright 2008 by The Associated Press. All Rights Reserved.)


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