Capitol Hill (CNSNews.com) – House Financial Services Chairman Barney Frank (D-Mass.), whose panel has oversight over the Troubled Asset Relief Program (TARP), told CNSNews.com on Thursday he is “not very well informed” about President Barack Obama’s plan to restructure General Motors and Chrysler, and he said he does not think that Congress is going to vote on the matter.
The auto industry bailout and restructuring is being funded with money taken out of the TARP law enacted last fall to bailout out the banking industry. Legislation dealing with the banking industry, including TARP, comes directly under the jurisdiction of Frank’s committee.
In fact, Frank himself was the sponsor of the auto-industry bailout and restructuring bill, H.R. 7321, that passed the House on December 10, but then failed to pass the Senate.
Yet, Frank would not say whether Congress should vote to authorize what Obama is doing with TARP funds insofar as the automobile industry is concerned.
Congress enacted TARP last year, providing $700 billion specifically to bail out financial institutions. When President Bush asked Congress late last fall to approve a bill authorizing federal money to bail out failing auto manufacturers, Frank's bill to authorize those presidential acts passed the House but failed in the Senate.
Even though the legislation was defeated, President Bush went ahead and unilaterally loaned $17.4 billion in TARP funds to GM and Chrysler without congressional authorization.
Obama is now unilaterally authorizing the further use of TARP funds to sustain GM and Chrysler while those companies attempt to carry out restructuring plans under Obama’s direction.
Congress has enacted no further legislation on the matter since it failed to pass the legislation President Bush sought late last year.
“It’s an administration situation so I’m not very well informed on it,” Frank told CNSNews.com Thursday, when asked about Obama’s auto restructuring plan.
Asked specifically about the president’s Monday announcement that federal tax dollars would guarantee the warranties of all new Chrysler and GM cars during the period they are undergoing restructuring, Frank said, “Do the words ‘I’m not very well informed on it’ have any meaning to you? Am I speaking a language you don’t understand?”
“It’s not something I’m focused on. The committee, which I chair, keeps me busy,” Frank continued. “I have not had a chance to look at that. I do not have an informed opinion on it. It’s not my understanding that Congress is going to get to vote on it. So I tend to focus on things that are under the jurisdiction of the committee and that we’ll have to vote on. When things are neither, I don’t have a very well-informed opinion.”
When asked if he thought Congress should have a say on the auto restructuring plan, Frank walked away without answering.
On Tuesday, House Majority Leader Steny Hoyer (D-Md.) told CNSNews.com that he did not know where Obama got the authority to carry out his restructuring plan for GM and Chrysler. On Thursday, House Minority Leader John Boehner (R-Ohio) expressed similar uncertainty.
Though Boehner criticized Obama’s auto restructuring plan, he said he did not know if the president could do it unilaterally without congressional authorization.
“I have no idea,” Boehner told CNSNews.com. “They just shouldn’t do it at all.”
The White House plan involves ordering both GM and Chrysler to restructure their operations and produce what the president describes as “fuel efficient” cars. In the case of Chrysler, it requires the company to merge with Fiat, an Italian car manufacturer. Additionally, Obama forced the resignation of GM President Rick Wagoner.
On Tuesday, Hoyer expressed puzzlement as to the source of the president’s power for doing all this.
“The administration clearly believes it does have the authority to use some of the remaining TARP funds for the automobile industry,” Hoyer told CNSNews.com.
“I don't know, technically. I would be kidding you to mouth some words on that, because I don't know technically where that authority would be,” Hoyer said.
“But my own view is that if it is perceived they don't have that authority and it is perceived by the Congress they need to have that authority, the Congress would probably be willing to give that authority. But I don't know technically the answer to that question,” he said.
On Thursday, Boehner said Obama has to stop intruding the government into private sector.
“When are we going to stop this? I mean step back for a moment and think about it,” Boehner said. “You know the federal government, the president, decides to fire the chairman of GM. And then the administration comes out and says, well, we think we want to replace the board at GM. And then you come up with this idea to provide these assurances, these guarantees on the warranties of these two companies.”
He added that the bailout of GM and Chrysler is unfair to other car companies, such as Honda that operates in his home state.
“I just think enough is enough,” Boehner said. “Yesterday we had another bill coming through – two bills – that seem to try to put the federal government in charge of deciding what salaries for employees ought to be. This is just out of control. Somebody has just got to say, enough is enough.”
House Budget Committee Chairman John Spratt (D-S.C.), told CNSNews.com Wednesday that an act of Congress is probably needed to implement the warranty guarantee program that President Obama has already announced.
“I would think that for a government officer to extend a warranty that will create a liability for the government, an act of law would be required,” Spratt said. “If I were the beneficiary of the warranty, I would certainly want to know the entity that extended it to me had legal authority to grant it.”
The administration may be acting under the broad authority of the Budget and Accounting Act of 1921, Spratt told CNSNews.com Wednesday. But, he stressed if it is not backed by some legislation, it should be.
“I would think as a matter of principle, this ought to be backed by legislative action. But I also think there will be some legislation to implement whatever the plan is,” Spratt said.
The president announced Monday that starting on that day the federal government would guarantee the warranties on all new Chrysler and General Motors cars.
“If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warranty will be safe. In fact, it will be safer than it’s ever been because starting today, the United States government will stand behind your warranty,” Obama said at the White House Monday when he announced his plan for dealing with the two auto makers.
The Warranty Commitment Program outlined by the administration would establish reserve funds that include 125 percent of the projected costs for servicing all Chrysler and all GM warranties for cars sold during the course of the restructuring program. Under the plan, the auto manufacturers will put up 15 percent of the projected costs, and the federal government will put up 110 percent.
Unlike Frank, Senate Banking Committee Chairman Christopher Dodd (D-Conn.), whose committee also oversees the TARP program, said Tuesday he anticipated being consulted on the auto restructuring program.
“I wasn’t consulted at all on the process, not that I expected to be necessarily, but as the committee of some jurisdiction on this matter, I kind of expected I might hear something. I’ve been reading about it in the papers basically,” Dodd said.