Obama Rejects ‘Car Czar,’ Naming Geithner, Summers to Head Team

Published: February 16, 2009

President Barack Obama opted against naming a “car czar,” instead asking Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers to head a task force on revamping the U.S. auto industry.

Ron Bloom, a United Steelworkers union adviser and former Lazard Ltd. vice president, will join administration members on the team, White House Press Secretary Robert Gibbs said today.

The president was under pressure to say who would handle the issue before tomorrow, when General Motors Corp. and Chrysler LLC must give progress reports on plans to restructure as a condition of $17.4 billion in U.S. Treasury loans. The task force puts an end to reports Obama would recruit a well-known figure from outside to serve as the so-called car czar, an approach that had some support in the auto industry.

“There needs to be a trail boss here,” said Andrew Gross, chairman and chief executive officer of Automotive Consulting Services LLC in Clackamas, Oregon, in a phone interview today. “Typically when you have a committee set-up it provides cover. Everyone’s responsible, but no one’s accountable.”

Geithner has “got his hands full” trying to rescue the banking industry, Gross said.

After Congress failed to approve a bailout for the automakers, former President George W. Bush’s administration authorized loans Dec. 19. That effectively made the Treasury secretary the car czar, with responsibility for making sure the companies meet deadlines and authority to revoke the loans.

Geithner will remain Obama’s official “designee” to oversee the restructuring. The Treasury secretary can recall the aid if the automakers fail to show by March 31 that they have a plan to become profitable.

‘Broader Array’

Obama’s task force will incorporate a “broader array of people” than a car czar, Gibbs told reporters on Air Force One today as Obama returned to Washington from a weekend in Chicago.

“The approach that the administration has settled on provides a vast amount of expertise that crosses a number of governmental agencies and departments,” Gibbs said. Geithner and Summers will coordinate responses “that include Energy and Transportation as well as the economic team.”

Bloom will bring “vast credibility” to the task force, Gibbs said. Bloom was described by administration officials as an expert in restructuring who also has experience in manufacturing and in working with unions.

Steven Rattner

Absent from the administration’s team is Steven Rattner, co-founder of private-equity firm Quadrangle Group LLC in New York. He had been under consideration for the post of car czar, people familiar with the matter said last month. Rattner declined to comment, spokesman Adam Miller said today.

“GM welcomes the creation” of the task force, the company said in a statement today. “We expect to meet soon with this team to share GM’s detailed restructuring plan.”

Chrysler spokesman Stuart Schorr said in an e-mailed statement that the company “looks forward to working with Secretary Geithner and the Presidential Task Force on the Auto Industry as the company continues and completes its restructuring plan.”

“President Obama has asked his most senior economic advisers to be involved in this effort, and that is a signal of the importance he gives to its role and responsibility,” Representative Sander Levin, a Michigan Democrat, said in a statement today.

Members of Congress, automakers and industry analysts have spent weeks discussing who might be chosen from outside Washington to serve as the car czar and what expertise that person should bring to the task.

Five Senate Democrats, including Debbie Stabenow of Michigan, wrote a letter on Feb. 5 urging Obama to name an expert in manufacturing as part of a panel to help oversee the auto loans.

Bloom’s Experience

Bloom, who will be a senior adviser at Treasury, has experience with an issue at the heart of the restructuring — health-care costs. Bloom helped negotiate the Goodyear Tire & Rubber Co. health-care fund, union spokesman Wayne Ranick has said. In 2005, Bloom met with UAW officials who were then evaluating GM’s request for health-care concessions.

Terms of the Dec. 19 loan agreements require GM and Chrysler to persuade the United Auto Workers to accept half of scheduled payments into a union-run retiree health-care fund next year in equity instead of cash.

Bloom counseled airline pilots in the $4.9 billion employee buyout of UAL Corp., parent of United Airlines. That 1994 deal included wage and work-rule concessions in exchange for 55 percent of the company.

He also helped steelworkers negotiate an agreement with Goodyear in 2003. The deal preserved 85 percent of union jobs at 12 U.S. plants in exchange for agreements on productivity improvements, health-care cuts and other issues to save Goodyear at least $1.15 billion.

Task Force Members

The task force on autos will include officials from the Treasury, Labor, Transportation, Commerce and Energy departments, as well as from the National Economic Council, the White House Office of Energy and Environment, the Council of Economic Advisers and the Environmental Protection Agency.

The industry’s preference for an overseer with a mastery of its workings and culture was voiced by Bill Ford, executive chairman of Ford Motor Co., on Jan. 11.

“It would be really helpful to have somebody in there who would take the time to have a deep understanding of our industry,” Ford said then at a dinner with reporters covering the Detroit auto show.

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