Obama auto bailout draws fire

Dozens of lawmakers fear impact on dealers, workers, lenders

Gordon Trowbridge and Deb Price / Detroit News Washington Bureau

Washington -- Members of Congress, who left GM and Chrysler on the brink of collapse five months ago, sought Friday to take control of the auto bailout, with dozens of lawmakers pressing claims for dealers, workers and lenders.

The complaints came from the political left and the right in a series of indignant press conferences and letters to administration officials: Rep. Dennis Kucinich, D-Ohio, one of Congress's most liberal members, compared the Obama's auto rescue to smothering a hospital patient with a pillow.

And Rep. Jeb Hensarling, R-Texas, a staunch conservative, wrote Treasury Secretary Tim Geithner accusing the administration of waging "a war on capital" in seeking concessions from lenders.

Another letter, signed by Kucinich and fellow Ohio Rep. Steve LaTourette, Michigan Reps. John Conyers and Thad McCotter, and others called for the administration to hand authority over the bailout back to Congress, repeating the 1979 Chrysler bailout, which came in the form of congressional legislation.

The sudden Capitol Hill interest came months after the previous Congress, largely on party lines, rejected pleas for aid from General Motors Corp. and Chrysler LLC -- to the dismay of some Michigan lawmakers.

"It was my hope that some of my colleagues would have gotten involved a long time ago," said Rep. Gary Peters, D-Bloomfield Township. "Some of my colleagues from around the country are realizing the auto industry is not just about the Midwest or Michigan."

McCotter, R-Livonia, accused his fellow GOP leaders of "selective sympathy" for GM lenders.

There were few signs the White House was altering its course, which already has put Chrysler into Chapter 11 bankruptcy protection and is all but certain to do the same with GM -- whose CEO it pushed out -- by early June.

The rush of activity before Congress's Memorial Day recess came as GM announced a crucial agreement with the Canadian Auto Workers to restructure wages and benefits, and amid published reports that a group of GM bondholders has decided to reject a bond exchange offer from the company designed as a last-gasp effort to avoid a bankruptcy filing.

A source familiar with the bondholders' discussions denied the bondholder reports. Still, it seemed highly likely that GM would not get the 90 percent approval that CEO Fritz Henderson has said the company needs to stay out of court.

Meanwhile, Ford Motor Co., the sole Detroit automaker not receiving federal aid, extended a buyout offer to hourly workers that was to have expired Friday. Workers now have until June 26 to consider an offer worth up to $75,000.

'Selective sympathy'

Conyers, D-Detroit, and other members of the Congressional Black Caucus, as well as Cleveland-area Reps. Kucinich and LaTourette, met with Obama auto task force adviser Brian Deese and others Friday, a day after the House Judiciary Committee that Conyers chairs suggested the administration has treated consumers and minority dealers unfairly.

After the meeting, LaTourette told The Detroit News that White House officials promised more consultations. "They said they were going to get back to us," he said.

It was unlikely the White House would accede to his request for the auto task force to end its dominant role in the companies' restructuring: White House spokeswoman Amy Brundage said the task force "will continue to work with all stakeholders."

In the Senate, Sen. Jay Rockefeller, D-W.Va., chair of the Finance Committee, and ranking Republican Sen. Kay Bailey Hutchison of Texas said they would summon GM and Chrysler officials to testify next month on the plan to cut nearly 2,000 dealers, which the lawmakers said unfairly left small businesses nationwide in peril.

Hutchison was among 35 Senate Republicans who in December blocked consideration of a bill that included aid to keep Chrysler and GM solvent. Days later, the Bush administration stepped in with temporary loans to stave off possible liquidation of both.

Other Republicans focused on GM bondholders, who have been offered just 10 percent of a rebuilt GM in exchange for more than $27 billion in debt, while a United Auto Workers fund for retiree health care gets a larger share.

"Contractual rights of investors are being trampled by the government," said a letter from Reps. Hensarling, Eric Cantor of Virginia and Mike Pence of Indiana, as well as other conservatives.

That set off an angry written statement from McCotter, normally those lawmakers' ally.

"The selective sympathy ... would be more compelling if they had expressed similar concerns for the auto workers' and retirees' who invested their lives in earning benefits from a health care fund that is owed $20 billion by GM," McCotter said.

But Sen. Carl Levin, D-Detroit, was less upset by his colleagues' 11th-hour interest.

"People have a right to complain and to hold hearings," Levin said.

All eyes turn to bondholders

The deal between GM and its Canadian Auto Workers union clears an important hurdle for the governments of Canada and Ontario to aid GM's restructuring. The governments could provide up to $8.5 billion in assistance to GM. On Thursday, GM reached a concessions agreement with the United Auto Workers union, whose members will vote next week on whether to approve it.

That turns attention to the bondholders, who face a 11:59 p.m. Tuesday deadline to approve GM's exchange offer.

gtrowbridge@detnews.com (202) 662-8738