Obama Aide Defends US Auto Rescue Before Congress
10 Juni 2009 - 9:00PM
Dow Jones News
A senior adviser to President Barack Obama waged a vigorous
defense of the administration's auto-industry rescue Wednesday and
said auto finance companies may need more government support.
Speaking before an increasingly skeptical Congress, Ron Bloom
said it would have been "irresponsible" for the administration to
forgive tens of billions of dollars of taxpayer loans to General
Motors Corp. (GMGMQ) without taking an equity stake in the company.
He said all stakeholders were treated fairly, and he defended plans
by GM and Chrysler LLC to cut employees and close thousands of
dealerships.
"The administration's decisions avoided a devastating
liquidation and put a stop to the long practice in the auto
industry of kicking hard problems down the road," Bloom said in
prepared remarks before the Senate Banking Committee.
In the latest sign that the administration's rescue efforts
aren't over, Bloom, a senior member of Obama's auto industry task
force, indicated the government will need to take more action to
spur lending to potential car buyers and auto dealers.
"As with many lending markets in the current financial crisis,
some government support of the U.S. automotive financing
marketplace has been and will continue to be required to ensure
that U.S. dealers and consumers have access to the necessary
financing to buy cars," Bloom said.
Bloom didn't specify in his testimony what form that support
would take. The government has invested $7.5 billion to GMAC LLC,
which finances GM and Chrysler vehicles.
Bloom said officials were looking at modifying a program run
jointly by the Federal Reserve and Treasury Department designed to
increase auto lending. That program, the Term Asset-Backed
Securities Loan Facility, or TALF, has produced limited benefits
for auto dealers because of eligibility requirements, he said.
"The Federal Reserve and Treasury continue to review and study
the eligibility requirements across asset classes," Bloom said.
It was the second congressional hearing in a week on the
restructurings of GM and Chrysler, with a third scheduled for
Friday, as lawmakers question key aspects of the rescue such as the
dealer closings.
Also scheduled to testify Wednesday was Edward Montgomery, the
White House director of recovery for auto communities and
workers.
The hearing was set to begin hours after Chrysler and Italian
auto maker Fiat SpA (FIATY) closed on their government-brokered
alliance.
-By Josh Mitchell, Dow Jones Newswires; 202-862-6637;
joshua.mitchell@dowjones.com