Plan to end auto task force draws doubts

Chrysler, GM vowed major production in U.S., report says

David Shepardson / Detroit News Washington Bureau

Washington -- The Government Accountability Office raised concerns Monday about the Obama administration's plan to disband the White House auto team and shift oversight to another Treasury office.

Separately, the GAO disclosed in a report released Monday that the Treasury Department, as part of loan agreements with General Motors Co. and Chrysler Group LLC, won guarantees from the automakers to keep significant production in the United States.

Chrysler must either "manufacture 40 percent of its U.S. sales volume in the United States or its U.S. production volume must be at least 90 percent of its 2008 U.S. production volume." The 40 percent figure is slightly below what the company produced in the United States last year.

A person familiar with the matter said a separate loan agreement with Canada requires Chrysler to maintain a fixed percentage of production there, as part of Canada's loans to Chrysler.

GM agreed to use "reasonable efforts" to ensure its U.S. production is "at least 90 percent consistent of the level envisioned in GM's business plan."

But in any event, the government would have to approve a shift of production overseas.

The GAO, in confirming that the auto squad will be replaced in the coming months, noted that just four of the original 12 professionals on the team remain. Some of those are expected to leave in the coming months. "Treasury officials told us there will likely be additional staff reductions in the future, because they plan to disband the auto team over time as other (Treasury) staff assume the role of monitoring the financial condition of the companies," the GAO said.

"We are concerned that Treasury may not have sufficient expertise to actively oversee and protect the government's ownership interests."

The government has a 61 percent stake in GM and nearly 10 percent stake in Chrysler.

The report noted that Ron Bloom, the administration's top auto adviser, recently was named to head its efforts on manufacturing as well. That, the GAO said, will "require him to split his time between the auto team and the new role."

The GAO report was the latest in a string of reports suggesting taxpayers are unlikely to get full repayment of the $81 billion invested in the auto industry.

A congressional oversight panel report and former auto czar Steve Rattner are among those who have reported taxpayers will lose billions on their investment.

GM spokesman Greg Martin said the automaker is working to repay the government.

"If we get our job done, the government has an excellent chance of getting a return on its investment," he said.

dshepardson@detnews.com (202) 662-8735