Oversight Board Could Be Part Of Detroit Bailout

Tight government control over the troubled American auto industry is just one of the provisions in legislation being drafted by Congressional Democrats as part of the bailout plan intended to save the big three auto makers.

The proposal includes the creation of a special committee that would oversee every aspect of the auto maker’s expenditures and management of government funds. The White House has made it clear that the auto companies would have to totally submit to government supervision in order to receive a taxpayer financed bailout, and that no “blank checks” would be issued.

The oversight committee would also direct the drastic reorganization plans that the auto companies have agreed to undertake in exchange for the billions of dollars in short term government loans needed to keep them in business. But the transition between the Bush and Obama administrations is complicating deliberations between the government and the auto makers. Both President Bush and President-elect Obama are consulting with the automakers on a regular basis.

General Motors, Ford, and Chrysler are asking for $15 million in emergency loans to keep them afloat through the next quarter. One factor that has yet to be decided before the money can begin to flow is, just how much control the government should have in the auto industry’s day to day affairs?

They are also expected to include tough taxpayer protection clauses in the legislation, which would give the government an equity stake in all three auto companies. The legislation may also include limits on executive pay and a ban on stock dividends while the loans are still outstanding. One of the proposals for the bailout legislation included a provision that would require the auto companies to ask the government for approval for any business transaction of $25 million or more.

Once Congress and the White House arrive at a compromise they can both live with, the Senate will need to approve it before it can take effect. Senator Carl Levin, Democrat of Michigan, and one of the biggest supporters of the auto makers, said “it is still uncertain whether the bill offering aid to the industry would win the 60 votes needed to pass the Senate.”

The transition team of President-elect Obama has been closely involved in the talks and has made it clear that the auto companies would have to go through a drastic restructuring process in order to revitalize their business and not simply use the bailout money to postpone an inevitable shutdown of the American auto industry.


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