U.S. May Give Car Czar Power to Force Bankruptcies of GM, Chrysler

The U.S. Treasury may adopt a plan that would let a car czar or the Treasury secretary force General Motors Corp. and Chrysler LLC into bankruptcy if the automakers don’t show they can survive without government aid, a U.S. senator said.

GM and Chrysler would be required to submit viability plans by March 31 or lose any further U.S. support, Carl Levin, a Democrat from Michigan, told reporters in Detroit yesterday. The Treasury plan would resemble a measure passed by the U.S. House last week that was rejected by the Senate.

“I expect that the terms would be similar to the ones that were in the House bill," Levin said. “The power rests in the hands of either the czar or the Secretary of the Treasury to force bankruptcy by March 31."

GM and Chrysler are seeking $14 billion to keep operating through the first quarter of next year. Without an infusion of cash, the largest U.S. automaker and No. 3 Chrysler may be only weeks from insolvency.

White House spokesman Tony Fratto declined to speculate on when a plan might be finished, though he said yesterday on Bloomberg Television that the administration wants to make sure taxpayers will get their money back.

‘Rigorous Oversight’

“Of course there will be conditions to any taxpayer financing," Fratto said. “There will be rigorous oversight to make sure that these companies are doing what they promised to do, and we want to make sure that everyone is making the concessions that they’re going to have to commit to make."

The administration may approve the loans today or tomorrow, Levin said. “Everyone knows it’s urgent," he said. “It’s a matter of weeks before they absolutely must have the funds in hand." More at Bloomberg.com