At recent U.S. Senate hearings on the auto bail out, yesterday's testimony by Auto Task Force Ron Bloom leaves one of two impressions; the Feds have good intentions and are heading in the right direction, or the government is clueless and operating in the dark (some would add, "as usual").
Responding to questions about how long the government will own a majority of General Motors, Bloom said "there will be a strategy to get out," saying the government hoped that GM could become a public company sometime next year through a new initial public offering. Bloom said, "We do not have a specific target in terms of years," Bloom said. "The mere issuance of that blueprint, we believe, would be market disruptive." Bloom said a large shareholder selling its shares "can be disruptive to other shareholders."
The Obama administration has stated that the new General Motors will have an initial public offering next year but has detailed no "blueprint" for extricating itself from its ownership stake in the company. This worries many who have felt that the government ownership of General Motors and Chrysler is giving those in goverment who favor social engineering another tool to utilize, albeit unconventional.
Defending the government's handling of the restructuring of General Motors Corp. and Chrysler LLC, Bloom insisted that the alternatives were far worse. Bloom furthermore insisted that the Auto Task Force had no role in selecting dealers or auto plants that are closing. "If we get in there and start telling the company 'You can do this' and 'You can't do this,' we might as well make them an arm of the U.S. government," Bloom told the Senate Banking Committee during a more than two-hour hearing that, among other topics, reviewed the Obama administration's fresh commitment of another $35 billion to GM and Chrysler that has followed the Bush administration's $17.4 billion provided last December.
Senators offered skepticism and colorful word pictures. The tarnished committee chairman, Sen. Chris Dodd, D-Conn., worried that GM could become "a kind of economic Vietnam."
"I'd like us to be out of this business yesterday. Obviously that's not going to happen," Dodd said.
Sen. Bob Corker, R-Tenn. sarcastically asked, "What number do you call" to try to keep a GM plant open, referring to the successful lobbying of Rep. Barney Frank, D-Mass., to keep a GM parts depot open for at least another year. GM made the decision just one day after Frank met with CEO Fritz Henderson. Bloom said the government had no role in that decision -- or any plant closing decisions.
Such actions do give one cause for pause, and the appearance of successful political strong arming doesn't sit well with many, especially those from states that have suffered most, such as Michigan. The state has absorbed seven of GM's 14 closing plants.
Sen. Richard Shelby, R-Ala., blasted the Obama auto task force's handling of the automakers, saying it has "embarked on a disturbing and difficult road."
"If the government intends to be a silent partner of sorts, how do they intend to protect the interest of the American taxpayer as a shareholder? I am not sure you can have it both ways," Shelby said. "The most difficult question, of course, is how Treasury intends to get out."
Sen. Kay Bailey Hutchison, R-Texas, questioned how the Obama auto task force could say it had no role when the administration had criticized GM and Chrysler as having too many dealers. The administration rejected the first plans as not aggressive enough. Bloom acknowledged that as a result, GM and Chrysler took more vigorous steps to cut more dealers.