“President Barack Obama’s auto task force is trying to restructure GM and Chrysler by March 31,” the AP earnestly reported February 25 in a dispatch typical of media reports that Washington’s patience was limited and the clock was ticking on taxpayer loans. “If GM and Chrysler fail to make a convincing case, the administration could pull the loans and essentially force the companies into bankruptcy protection.”
Judgment Day, March 31. You didn’t really believe it, did you?
This week, task force team leader Steve Rattner quietly admitted that they were just kidding about that March 31 deadline thing. “(The task force) doesn’t plan to recall early the $17.4 billion in government loans given to GM and Chrysler, something allowed under the loans’ terms,” reported the Wall Street Journal. “The administration officials said the two automakers had already spent the cash, and that asking for the funds to be returned immediately would trigger their collapse.”
March 31 — long championed by anti-bankruptcy advocates as evidence pols were serious — was just a bluff. And its passing confirms that without the stick of Chapter 11, there is little incentive for anyone to get serious about reform. “By emphasizing that bankruptcy was not a preferred option, and by removing any threat of putting the automakers in default by recalling the loans, Mr. Rattner’s team will ease some of the pressure that has been on GM, Chrysler and their constituents to make immediate and sweeping concessions,” continued the Journal.
In fact, the actions of Mr. Rattner and his White House boss signify that this administration has abandoned the requirements set forth by the Bush administration when the loans were first negotiated last December. Instead, the companies now look like wards of the state.
For example, far from being a public loan officer the White House is now reviewing the companies’ most basic business decisions.
“The Obama Administration hasn’t decided whether to approve a tie-up between Chrysler and Fiat,” reported the Detroit News Monday. “Steven Rattner said the administration was still reviewing a proposed deal to give Fiat a 35 percent stake in Chrysler LLC. ‘We need to understand better where Fiat is at and whether that is potentially a realistic deal,’ Rattner said.”
And while in California this week, President Obama will outline his vision for Detroit’s future when he visits a Ford electric car research facility funded by the Energy Department. “Obviously as we imagine an auto industry for the future . . . the president hopes to focus and highlight the ability for clean energy jobs to spur economic growth,” says White House spokesman Robert Gibbs.
The administration is always quick to reassure that its nationalization of the industry is not nationalization. “We’re not going to put these companies on some kind of indefinite intravenous drip feed of money,” says Rattner.
Sure. And March 31 is a day of reckoning.