GOP leaders renew attacks on White House over auto industry rescue

WASHINGTON – A day after the Obama administration hailed progress in the government-sponsored turnarounds of General Motors and Chrysler, congressional Republicans leveled fresh political criticism today at the administration’s aid to the industry.
The questions came as GM said today that the payback of $5.8 billion in loans to the U.S. and Canadian government allowed it unlimited access to $6.6 billion from bankruptcy escrows funded mostly by the U.S. Treasury.
Under the bankruptcy agreements between the Obama administration and GM, the automaker received $16.1 billion in cash that it could only spend by approval of the Obama auto task force. Any of that cash left by June 30 had to go toward paying off the original $7.1 billion in loans.
U.S. Sen. Chuck Grassley, R-Iowa, asked Treasury Secretary Timothy Geithner to justify GM’s use of money from the escrow accounts to pay off the loans, saying the automaker and Obama administration gave misleading comments Wednesday that the money came from GM’s earnings.
“It is unclear how GM and the administration could have accurately announced yesterday that GM repaid its TARP loans in any meaningful way,” Grassley said in his letter to Geithner, referring to the $700 billion Troubled Asset Relief Program. “In reality, it looks like GM merely used one source of TARP funds to repay another.”
Meanwhile, U.S. Rep. Darrell Issa, R-Calif., accused the White House of strong-arming automakers last year into backing fuel economy standards of 35.5 miles per gallon by 2016 in return for keeping GM and Chrysler from collapsing in bankruptcy.
Issa asked the CEOs of nine automakers -- GM, Chrysler, Ford and the U.S. arms of Toyota, BMW, Volkswagen, Nissan, Suzuki and Honda – to turn over a bevy of documents about the talks with the White House and California officials that led to the agreement last May. The rules went into effect last month.
“It is unclear whether the Administration used leverage created by the possibility of a taxpayer bailout of GM and Chrysler to secure their cooperation and support for new fuel economy standards,” Issa said in the letter.
GM has not attempted to hide that the loans were being paid with other government money, but has said that paying back the loans five years ahead of schedule was a sign that the automaker’s worst days were over.
GM CEO Ed Whitacre said Wednesday that he told Geithner and National Economic Council Director Larry Summers that the government might recover all of the nearly $50 billion spent rescuing GM.
“We're paying back these loans early because we're making great progress and we have a great lineup of vehicles that are selling very well,” said GM spokesman Greg Martin. “We believe paying back the loans as soon as possible, with interest, is the right thing to do.”
The auto industry, led by the Alliance of Automobile Manufacturers, asked the administration to set new fuel economy standards last year so that automakers wouldn’t face a patchwork of rules written by California and endorsed in a dozen other states. The Obama administration was also forced to act by a Supreme Court ruling requiring the U.S. Environmental Protection Agency to regulate greenhouse gases from cars and trucks.
The Obama auto task force in 2009 never seriously considered letting GM fail. It did closely debate whether to aid Chrysler, but decided letting it collapse would only worsen the recession.
“For years automakers made no secret of their desire for a national fuel economy and greenhouse program,” said Alliance spokesman Charles Territo. “The regulations finalized earlier this month eliminate the patchwork of conflicting standards and restore federal leadership on this important issue.” http://bit.ly/cyXmZa