Existing users please login

 

Home / Markets / Industries / Industrials

Report: White House Ditches Car Czar as Talks Break Down

 
By Matt Egan
FOXBusiness
     

    The idea of a "car czar" appears to be dead as auto companies face a Tuesday deadline to present viability plans to Congress.

    Amid reports of new roadblocks between Detroit’s Big Three auto makers and the United Auto Workers union, the White House has scrapped plans to name a czar-like official to oversee the restructuring of the auto makers, according to The Wall Street Journal. Instead, President Barack Obama reportedly plans to unveil a task force to oversee the restructuring of General Motors (GM), Ford (F) and privately held Chrysler LLC.

    Treasury Secretary Timothy Geithner and Lawrence Summers, the head of the National Economic Council, will reportedly lead the new task force, which faces the monumental task of guiding Detroit through a potentially long and painful restructuring to become financially viable.. 

    "How that restructuring comes is something that has to be determined," White House senior adviser David Axelrod told "FOX News Sunday." "But it's going to be something that's going to require sacrifice not just from the auto workers but also from creditors, from shareholders and the executives who run the company. And everyone's going to have to get together here to build companies that can compete in the future."

    Meanwhile, sources with knowledge of the GM restructuring plan tell FOX Business's Jeff Flock GM will submit its plan sometime after the market closes on Tuesday. GM will release a summary of the plan but has not yet received guidance on whether the government wants the full plan to be made public or not, Flock reports

    The odds seem to be increasing that GM and Chrysler will fail to submit complete viability plans by Tuesday. The Journal reported that the companies have hit roadblocks in negotiations with the UAW over how to restructure a trust fund for retiree health care. GM confirms to FOX Business it remains in talks with the UAW about concessions on work rules, pay and how to fund the Voluntary Employee Beneficiary Association, or VEBA.

    If GM and Chrysler are unable to win key concessions required under the terms of their emergency loans out of court, both may have no choice but to file for bankruptcy protection, the newspaper reported.

    Talks had been expected to be held throughout the weekend but they ended abruptly on Friday, the Journal reported. "We expect this to go right to the wire," one person told the newspaper. "We have no idea when things might resume."

    The roadblocks come as GM and Chrysler race to meet a Feb. 17 deadline to file extensive restructuring plans and concession commitments from union leaders and creditors.

    "I'm not going to prejudge anything. I think that there is going to have to be a restructuring of those companies. I'm not going to get into the mode of how that happens. We'll wait and see what they have to say on Tuesday," Axelrod said.

    In one of his final moves in the White House, President George W. Bush signed off on $13.4 billion in loans to keep GM and Chrysler from a collapse that they say would cause millions of layoffs.

    While the White House won’t name a single official to oversee the restructuring, it will reportedly bring in Ron Bloom, a special assistant to the president of the United Steelworkers union and former investment banker, as a special adviser on the auto restructuring.

    “Bloom brings a wealth of expertise on industrial and manufacturing issues, and a range of experience from both the corporate sector… and from labor,” a senior administration official told FOX News.

    The absence of a car czar or task force on the auto issue has led to delays in the restructuring process, the Journal reported.

    Talks have hit a snag over how and when to fund VEBA, which was established in 2007 as a vehicle to take responsibility for tens of billions of dollars in health-care obligations next year, the Journal reported. GM is attempting to fund it with less cash and more stock than it had earlier promised, GM confirmed to FOX Business. 

    "There is a growing sense that they may be not be much off worse in bankruptcy," a source told the newspaper. "Talks have gone almost nowhere (and bondholders) don't know what the company is going to be worth and they feel the company is siding with the union."

    Despite the roadblocks, GM and Chrysler said they are committed to meeting their Tuesday deadline.

     

    Fox Business Video