President Barack Obama's auto task force told skeptical lawmakers Wednesday the government had no plans to pump more dollars into General Motors and Chrysler and that the public had a "reasonable probability" of getting its money back.
Ron Bloom, a senior adviser to the task force, faced numerous questions about the roughly $80 billion in federal aid to the car companies, their lending affiliates and suppliers. He said the Obama administration's efforts had given the automakers "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," 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," Bloom said. He 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 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 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," said Dodd, D-Conn. "But it also begs the question: How will the government extricate itself from such a commitment in the future?"
Sen. Richard Shelby, a bailout critic, questioned how the Treasury Department "intends to get out."
Pressed by Shelby, R-Ala., 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.
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," Bloom said, but "it is our belief that this will be the last trip to the well."
When Sen. Evan Bayh, D-Ind., asked whether the taxpayers would get their money back, Bloom said the task force 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 Corp. filed for Chapter 11 bankruptcy protection on June 1. Company leaders have said they hope to emerge as a new company in 60 days to 90 days. Italian automaker Fiat Group SpA closed a deal on Wednesday to become the new owner of most of Chrysler's assets, saving the company from liquidation. The new company will be called Chrysler Group LLC.
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."
Bloom told lawmakers the administration has stayed clear of business decisions such as dealership closings, a sore subject among many lawmakers.
"There are profitable dealers that are being closed — not just underperforming," said Sen. Kay Bailey Hutchison, R-Texas. "How is it a drag on the company?"
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.
Edward Montgomery, who serves as Obama's director of recovery for auto communities and workers, described the administration's work to help Midwest communities dependent upon the auto industry.
"There is no magic bullet. The challenges that the regions face did not appear overnight and will not be resolved overnight," Montgomery said.