Pop quiz: are executives the only ones who can declare one of the Detroit Three to be bankrupt? If the Bush Administration has its way, that answer would be no.
As part of Friday’s Congressional hearings into a possible stimulus loan for the Detroit automakers, legislators suggested the possibility of appointing an administrator – or ‘car czar’ – to oversee both corporate actions and use of the loan. At the time, the idea was seemingly approved by CEOs from GM, Ford, and Chrysler.
But it’s doubtful they would have liked the administrative power suggested today by White House Press Secretary Dana Perino: the power to force a company into Chapter 11 bankruptcy protection. Such reorganization is feared by all three companies, and would, according to many industry analysts, be ‘cataclysmic’ to both the domestic automakers and the U.S. economy.
That fear could perhaps force each company to restructure even further on its own accord. According to Perino, the Bush Administration wants the loan overseer to force Chapter 11 on any of the companies if he or she felt the company “failed to execute a plan for viability.”
Whether or not such power will be installed remains to be seen, but it’s more than likely some form of an administrator will be appointed if an automaker aid package is ratified. Presently, a $15 billion emergency loan – designed to carry the automakers into the era of the Obama Administration – is being discussed by legislators, and is reportedly “very likely” to pass today.
Source: Automotive News