The U.S. Treasury will not step in to influence management decisions at General Motors Co and Chrysler LLC after providing the automakers with some $70 billion in financing to restructure in bankruptcy, a White House adviser said on Monday.
The Obama administration is a reluctant shareholder in New General Motors as well as New Chrysler, Ron Bloom, the senior adviser to the White House-appointed auto task force, told a congressional oversight panel meeting in Detroit in prepared remarks.
Bloom said the emergency government assistance had prevented a liquidation in bankruptcy for two of the three U.S. automakers, but added that in a better world, the choice to intervene would not have had to be made.
Bloom said that the success of the Obama administration's efforts to save GM and Chrysler will be judged now on how fully and how quickly taxpayer funding is repaid.
An initial public offering of stock in the restructured GM could come as soon as 2010 and include some combination of new shares and the sale of government-held stock, Bloom said.
The taxpayers put a lot of money up, and they want their money back, he said.
Bloom was answering questions from a congressional oversight panel appointed in 2008 to review the use of $700 billion earmarked to stabilize financial markets under the Troubled Asset Relief Program.
The panel, which is headed by Harvard Law School professor Elizabeth Warren, convened Monday's meeting in Detroit to hear from a range of officials, executives and other experts on the Obama administration's auto bailout.
In his prepared remarks, Bloom said the autos task force was watching the health of financially strapped parts suppliers closely.
But he also said that U.S. officials would take a hands-off approach to decisions on how to implement an attempted turnaround at GM and Chrysler now.
Now that both GM and Chrysler have selected new boards, the U.S. Treasury will not have any involvement until those just-appointed slates of directors are up for election next year, Bloom said.
That will be the full extent of it, he said in response to a question from Warren.
Chrysler's new board of directors meets this week for the first time since the automaker emerged from bankruptcy in June to start charting the course for a turnaround under Italy's Fiat SpA.
(Reporting by Kevin Krolicki and David Bailey, editing by Matthew Lewis)