Wednesday, November 11, 2009

Obama taskforce faces Congress over car industry rescue

Members of President Obama's auto task force are expected to face tough questions about America's ailing car industry when they appear at a congressional committee hearing today.

It is the first time White House representatives will face public scrutiny over the decision to use billions of dollars in taxpayers' cash to bail out General Motors (GM) and Chrysler.

Ron Bloom, the former investment banker who led the task force's labour negotiations, and Edward Montgomery, President Obama's director of recovery for auto communities and workers, will testify to the Senate Banking Committee in Washington this afternoon.

The hearing will review the use of funds from the Troubled Asset Relief Programme (Tarp) to put the two car companies through the Chapter 11 bankruptcy process.

The Government will provide up to $50 billion (£30.5 billion) to GM alone to get the carmaker back in operation, in return for a 60 per cent stake in the restructured company.

Christopher Dodd, the Democrat Senator who chairs the committee, is expected to press Mr Bloom and Mr Montgomery on how soon taxpayers can expect a return on their investments.

Republicans have already criticised the White House's decision to override US bankruptcy laws to save the carmakers and called on Chrysler to give its dealers more time to close down their businesses.

Chrysler, which filed for Chapter 11 bankruptcy protection on April 30, is expected to emerge as a restructured company within days, after the Supreme Court last night lifted a stay on the sale of the company's assets to a group led by Fiat, the Italian car group.

GM filed for Chapter 11 on June 1 and is expected to emerge from bankruptcy by August.

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