Auto task force may hold recommendations until next week
Gordon Trowbridge and David Shepardson / Detroit News Washington Bureau
WASHINGTON -- Sen. Carl Levin said Wednesday the Obama administration may not announce its next step in restructuring the auto industry until next week.
"We have an indication it's going to be within the next week," said Levin, D-Detroit. That could push an announcement beyond this week, when the administration's auto task force had been expected to lay out its path forward for General Motors Corp. and Chrysler LLC.
The automakers, as part of receiving $17.4 billion in government loans, are to show by March 31 that they have a plan that will make them viable.
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President Obama's auto task force plans to lay out some initial assessments of the automakers' likely fortunes, and may set deadlines for further progress and outline conditions for additional assistance.
GM and Chrysler have sought $21.6 billion in additional aid; the administration's top auto task force advisor, Steve Rattner, said last week that the two may need "considerably more" than that amount.
Levin said advisers to the task force have not briefed him on their recommendations, and he expects "a last shot" at them before they announce their findings.
Levin said he expects the task force to make more aid available to the companies, if they take specific steps toward restructuring.
"I think it's clear there will be more support, and there will be some conditionality to it," he said.
And Levin offered some advice, in the form of a warning, to GM bondholders who so far have resisted restructuring guidelines that call on them to forgive two-thirds of the company's debt and replace the rest with GM stock.
Rattner admonished bondholders to work harder to reach a debt restructuring agreement with GM, prompting an ad hoc committee representing many of GM's bondholders to fire back, saying they were being asked to sacrifice more than other stakeholders, including the United Auto Workers union.
Levin suggested the bondholders risk losing even more if they don't agree to a significant "haircut," or loss, on the debt they hold.
"I think they ought to take Rattner seriously," Levin said. "I think the bondholders recognize what the alternatives are: It's that they either take a haircut, or they take a bath. ... I hope they choose the haircut."
The task force created a $5 billion program from the Troubled Asset Recovery Program to help auto parts suppliers, but it may take further steps to help suppliers.
The task force is mulling other ideas, too, including backing proposals to stimulate auto sales, which have fallen to near record lows.
Deutsche Bank AG auto analyst Rod Lache said in a research note this week that auto sales could fall 43 percent in March, on sharply lower sales from GM and Chrysler.
That would reflect a sales rate of just 8.6 million vehicles. Last month's seasonally adjusted sales rate of 9.1 million vehicles was the lowest since 1981.
