WASHINGTON - President Obama's auto task force, defending its work to rescue General Motors Corp. and Chrysler L.L.C., told skeptical lawmakers yesterday that the administration acted to prevent liquidation and massive job losses.
The government has no plans to throw more money at the automakers, and there are "reasonable scenarios" whereby taxpayers might get most or all of their money back, a senior adviser to the task force said.
Ron Bloom said the car companies faced "uncontrolled bankruptcies and almost certain liquidation," which would have caused "substantial job loss with a ripple effect throughout our entire economy."
Addressing questions about the billions of dollars in government aid to save the failing companies, Bloom said the administration's efforts had given GM and Chrysler "a chance to become viable, competitive businesses with bright futures."
The hearing gave lawmakers their first public crack at task force members whose decisions have left taxpayers on the hook for billions and forced some dealers into oblivion.
Sen. Christopher J. Dodd (D., Conn.), chairman of the Senate Banking, Housing, and Urban Affairs Committee, 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," Dodd said. "But it also begs the question: How will the government extricate itself from such a commitment in the future?"
Sen. Richard Shelby (R., Ala.), a bailout critic, questioned how the Treasury Department "intends to get out."
Pressed by Shelby on how long the government's involvement would last, Bloom said there was not "a specific target in terms of years." The financial markets, he said, would help answer that question.
The government has provided about $80 billion to GM and Chrysler, their suppliers, and their lending affiliates. Bloom said it was the administration's "absolute intent" not to provide more.
General Motors filed for Chapter 11 bankruptcy protection June 1. Company leaders have said they hope to emerge as a new company in 60 to 90 days. Italian automaker Fiat Group S.p.A. closed a deal yesterday to become the new owner of most of Chrysler's assets, saving the company from liquidation.
Bloom said the White House was a "reluctant shareholder" in GM, but determined that "piling on irresponsible amounts of new debt" onto the company would have "repeated the mistakes of the past."