Posted by: David Kiley on February 16, 2009
The Obama Administration’s decision not to appoint some tough, experienced “car czar” to oversee the restructuring and financial viability plans of GM and Chrysler was predictable and foretold by a few executives and Capitol Hill sources in the past two weeks.
Why? By having a Treasury Dept. group reporting to the Treasury Secretary, the Obama administration can better control the outcome of the review. A “car czar” might come up with an assesment that is politically inconsistent with where the Administration wants this to end. And such a person could wind up leaking their own findings if the Administration doesn’t like what they read. This way, however it turns out, the Administration can shape and ultimately own the outcome.
There is not much appetite in the administration for pushing GM and Chrysler into bankruptcy. The impact on the United Auto Workers and GM retirees would be devastating under those conditions. That’s a constituency Democrats don’t really want to antagonize. Also, the unknown of the impact of a GM/Chrysler bankruptcy on the already devastated Midwest economy is not a movie the administration is anxious to see.
An auto industry executive with knowledge of the negotiations going on between GM and the UAW, and between both parties and the administration said this on Monday: “Two months ago I never would have thought there was much possibility of GM going into anything resembling bankruptcy…now I think its more like 50-50 or 51-49…But no question the administration wants to avoid it and I suspect they ultimately will avoid it.”