UPDATE:GOP Lawmaker Presses For More Oversight Of Auto Bailout
22 Mai 2009 - 10:32PM
Dow Jones News
A Republican on the U.S. congressional panel set up to oversee
the government's financial rescue is pressing for increased
scrutiny of the program, which he argues is being misspent on the
restructuring of the auto industry.
Rep. Jeb Hensarling, R-Texas, a member of the five-person
Congressional Oversight Panel, said Friday he will push for
hearings on the restructurings of General Motors Corp. (GM) and
Chrysler LLC. The auto makers have received billions of dollars in
bailout funds from the Troubled Asset Relief Program, which was put
in place under the Bush administration to stabilize the financial
system.
In a letter to Treasury Secretary Timothy Geithner, Hensarling
said he is "extremely concerned" about how the Treasury Department
is handling negotiations involving the United Auto Workers and GM's
unsecured lenders. Under a government-backed deal, the UAW would
get a 39% equity stake in GM, while unsecured lenders, who are owed
more money, would receive a 10% equity stake.
"The proposal seems to favor the rights and claims of the UAW, a
political ally of the current administration and a powerful
lobbying force in Washington, over the rights and claims of the
company's diverse group of bondholders," Hensarling wrote.
Hensarling said in an interview that he planned to press Rep.
Barney Frank, D-Mass., chairman of the House Financial Services
Committee, to hold hearings on the matter. A spokesman for Frank
said the chairman would decide whether to hold a hearing once he
received a formal request.
Hensarling accused the Obama administration of using TARP funds
to advance the agenda of organized labor, rather than to stabilize
banks. He said the government-backed GM proposals appear to subvert
"rules inherent in the U.S. bankruptcy code that define the rights
of creditors in the event of a default or a bankruptcy filing."
Hensarling warned that the proposals would discourage creditors
from providing capital to troubled institutions.
"The wisdom of vilifying and punishing investors...at a time
when we desperately need the voluntary capital of investors, as
opposed to the trillions of involuntary capital of taxpayers, it's
just an incredibly foolish policy," Hensarling said.
A Treasury Department spokesperson defended the administration's
handling of the GM talks.
"Not a single creditor's right has been unfairly altered during
this process," the spokesperson said. "From the beginning, the
President has been clear that the government should engage in a
fair and reasonable manner. That is what our team has done and will
continue to do going forward."
-By Josh Mitchell, Dow Jones Newswires; 202-862-6637;
joshua.mitchell@dowjones.com