U.S. Won’t Restrict GM, Chrysler Boards, Bloom Says
General Motors Co. and Chrysler Group LLC’s directors, presiding over companies propped up with federal aid, will operate without government restrictions, President Barack Obama’s top auto adviser said.
The boards won’t have to “check” before making decisions, Ron Bloom, who took over from Steven Rattner two weeks ago, told a congressionally appointed panel in Detroit today. GM named government appointees last week to the reorganized board of the biggest U.S. automaker.
“The companies’ long-term viability and ability to repay the taxpayer dollars they were receiving would be seriously undermined if the government became involved in day-to-day business decisions,” Bloom said.
Federal officials will limit their role to reappointing or replacing board members, Bloom said. He spoke at a hearing that is part of meetings across the country to oversee use of the government’s $700 billion Troubled Asset Relief Program that provided the auto funding.
Bloom advised the task force Obama chose in February to use the funds to restructure Detroit-based GM and Chrysler in bankruptcy. Both emerged with less debt and fewer dealerships, with the Treasury owning 61 percent of the new GM and almost 10 percent of Chrysler.
“The day-to-day running of our business is left to our company,” Jan Bertsch, treasurer of Auburn Hills, Michigan- based Chrysler, said at the hearing. Chrysler’s board is having an extended meeting this week.
‘In the Hospital’
GM plans to pay off its government debt before a six-year deadline, and is aiming for an initial public offering by 2010, Walter Borst, the company’s treasurer, said at the session. Chrysler wants to pay back its loans early, Bertsch said, without commenting on the possibility of a public offering.
The automakers should pay back some taxpayer money, Rebecca Lindland, a senior forecaster at IHS Global Insight Inc. in Lexington, Massachusetts, said in an interview on Bloomberg Television. The companies may not be able to repay all their loans, she said.
“Even though GM and Chrysler have emerged from bankruptcy, it doesn’t mean that they’re in great health,” Lindland said. “They’ve just gone through the operation and they’re still in the hospital.”
Sharing Limited Data
Neither GM nor Chrysler anticipates further emergency loans from the government, the treasurers said. Both companies are applying for a federal program to help create more fuel- efficient vehicles, they said.
GM expects to receive more than $10 billion in Department of Energy funding now that the company has emerged from bankruptcy, said Greg Martin, a spokesman. GM is working through its loan applications with the Department of Energy, he said in an interview. Energy Secretary Steven Chu said last month that the agency was reviewing GM’s application.
GM and Chrysler are being asked to share financial data such as revenue and profitability, without providing the “full” U.S. Securities and Exchange Commission reports that publicly traded companies are required to file, Bloom said, without giving details.
GM exited bankruptcy July 10, when the former General Motors Corp. sold most of its assets to the new General Motors Co. Chrysler Group was formed with the sale of a majority of its predecessor’s assets June 10 to a group led by Italy’s Fiat SpA.
Bloom oversees what Treasury Secretary Timothy Geithner called the government’s new phase of “unprecedented and temporary involvement in the automotive industry.”
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