Adviser defends auto strategy

Obama's staff worked hard to save jobs and dealers, aide says

David Shepardson / Detroit News Washington Bureau

Washington -- A top adviser to the Obama administration's auto task force defended the government's handling of the restructuring of General Motors Corp. and Chrysler LLC Wednesday, saying the alternatives were far worse.

During a hearing before the Senate Banking Committee, Ron Bloom insisted the administration had no role in deciding which dealers or auto plants will close.

"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," said Bloom, appearing before the committee for more than two hours.

The committee is reviewing the White House's role in the restructuring of the U.S. auto industry.

Skeptical senators urged the administration to get out of the car business as soon as possible.

Committee Chairman Chris Dodd, D-Conn., worried that GM could become "a kind of economic Vietnam." One senator called the Obama administration's handling of the auto industry decision "heartless;" another called the administration "God-like" in its oversight.

"You decide the winners and losers," said Sen. Bob Corker, R-Tenn.

He 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 in his district 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.

But that decision on Frank's plant has prompted anger in Michigan, where seven of GM's 14 closing plants are located.

Bloom said "there will be a strategy" for the government to get out of GM's business. The government hopes GM will become a public company next year, through a new initial public offering.

"It is our absolute intent that this be the last assistance to these two companies," Bloom said, not completely ruling out new money.

The administration has committed another $35 billion to GM and Chrysler after the Bush administration agreed to infuse $17.4 billion in GM and Chrysler last December.

Bloom acknowledged that product liability claims will be left behind in bankruptcy. He called that "terrible" for the victims, but said automakers had made many promises they couldn't keep.

Sen. Mike Johanns, R-Neb., said the administration "comes across as heartless and indifferent" referring to the closing dealers and others who will lose out in the bankruptcy.

Bloom said the task force's actions had saved countless jobs.

"I am sorry that you feel like we have been heartless. I think we have worked to save hundreds and hundreds of thousands of jobs and thousands and thousands of dealers," Bloom said, adding that the alternative for these companies was "nothing for anyone."

The Treasury Department will hold a 60 percent stake in GM after it emerges from bankruptcy.