No more cash for carmakers - Obama taskforce

President Barack Obama’s auto taskforce has told sceptical US politicians that the government had no plans to pump more money into carmakers General Motors and Chrysler, and said the public had a “reasonable probability” of getting its money back.

Ron Bloom, a senior adviser to the taskforce, faced numerous questions about the €80bn (€57bn) aid to the car companies, their lending affiliates and suppliers.

He said the Obama administration’s efforts had given the carmakers “a chance to become viable, competitive businesses with bright futures”.

“We strongly believe this is the last money that GM will require. I cannot make a promise about the future but I can assure you that it has been a vigorously debated and thought-about question,” Mr Bloom told the Senate Banking, Housing and Urban Affairs Committee.

“I do believe that there is a reasonable probability that we can get most if not all of our money back.”

Mr Bloom said the companies had faced “uncontrolled bankruptcies and almost certain liquidation” that would have caused “substantial job loss with a ripple effect throughout our entire economy”.

The hearing gave politicians their first public crack at taskforce members whose decisions have left taxpayers on the hook for billions and forced some dealers into oblivion.

Democratic senator Christopher Dodd, the committee chairman, said he wanted the government’s intervention to end as soon as possible.

“The administration believes that this structure avoids the imposition of further debt on these companies,” Mr Dodd said.

But he said it also brought up the question “how will the government extricate itself from such a commitment in the future?”.

Senator Richard Shelby, a bailout critic, questioned how the US treasury department “intends to get out”.

Pressed by Mr Shelby, a Republican, on how long the government’s involvement would last, Mr Bloom said there was not “a specific target in terms of years”. The financial markets, he said, would help answer that question.

Mr Bloom said it was the administration’s “absolute intent” not to provide more funding to GM and Chrysler.

“You never say never in this world,” Mr Bloom said, but “it is our belief that this will be the last trip to the well”.

When Democratic senator Evan Bayh asked whether taxpayers would get their money back, Mr Bloom said the taskforce examined “scenarios where over time a very substantial portion and potentially all of the taxpayer investment in General Motors would be returned”.

But, he added: “By no means would say I am highly confident that that would occur. I think there are reasonable scenarios where it could occur.”

General Motors filed for bankruptcy protection on June 1. It hopes to emerge as a new company in 60 to 90 days. Italian car giant Fiat closed a deal yesterday to become the new owner of most of Chrysler’s assets, saving the company from liquidation. The new company will be called Chrysler Group.

Mr Bloom said the White House was a “reluctant shareholder” in GM, but determined that “piling on irresponsible amounts of new debt” on to the company would have “repeated the mistakes of the past”.

He said the administration had stayed clear of business decisions such as dealership closures – a sore subject among many politicians.

“There are profitable dealers that are being closed, not just underperforming,” said Republican senator Kay Bailey Hutchison. “How is it a drag on the company?”

Mr Bloom said cutting dealerships was one of the “deep and painful sacrifices from all stakeholders”, including the United Auto Workers union and bondholders, that was required to help the companies rebound.