Hoyer: ‘I Don’t Know’ Where Obama Got Legal Authority for Auto Plan

March 31, 2009 - 6:12 PM
House Majority Leader Steny Hoyer (D-Md.) told CNSNews.com on Tuesday that he does not know where President Barack Obama gained legal authority to oversee a restructuring of General Motors and Chrysler. 

House Majority Leader Steny Hoyer (D.-Md.)

(CNSNews.com) - House Majority Leader Steny Hoyer (D-Md.) told CNSNews.com on Tuesday that he does not know where President Barack Obama gained legal authority to oversee a restructuring of General Motors and Chrysler.  But if authority is a question, he said, then Congress will grant it to the administration.  
 
However, when Congress  tried to enact an auto industry bailout plan in December, the legislation was approved by the House but failed in the Senate where, under the rules, it needed 60 votes.

Senate Banking Chairman Chris Dodd (D.-Conn.), meanwhile, toldCNSNews.com he was somewhat surprised that the administration did not consult with him at all about its auto industry plan despite his key committee chairmanship and that he had “been reading about it in the papers basically.”
 
Hoyer was similarly candid about his inability to cite the administration’s legal authority for the plan.
 
“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 Tuesday. 
 
“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.”
 
The White House is implementing its plan under the $700 billion Troubled Assets Relief Program (TARP) that Congress enacted last year specifically to bail out financial institutions—and not other businesses such as auto manufacturers.  When President Bush asked Congress last fall to approve legislation authorizing him to use TARP money to bailout the auto industry, Congress rejected the legislation.
 
Even though the legislation was defeated, President Bush’s Treasury Department went ahead and loaned $17.4 billion in TARP funds to General Motors and Chrysler.
 
Critics ranging from Clinton Administration Labor Secretary Robert Reich to the conservative Heritage Foundation criticized Bush for acting unlawfully in doing so.
 
The TARP law specifically says, “The Secretary is authorized to establish the Troubled Asset Relief Program (or ‘TARP’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary.”
 
The law does not include auto companies under the category of “financial institution.” The law says the following: “The term ‘financial institution’ means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.”
 
Dodd, like Hoyer, expressed uncertainty when asked where the president got the authority to further fund the auto industry and oversee its restructuring given that TARP only authorizing federal aid to financial institutions.
 
“I don’t know whether there is legislative action needed regarding all this,” Senate Banking Chairman Christopher Dodd (D-Conn.) told CNSNews.com Tuesday. “There may be. I just don’t know enough details of this and obviously we’re going to be talking about it.”
 
On Monday, President Obama announced certain conditions that General Motors and Chrysler would have to meet to get additional government funds. These included requiring both automakers to produce more “fuel efficient” vehicles, and requiring Chrysler to merge with the Italian auto maker Fiat.
 
Additionally, the administration “asked” General Motors President Rick Wagoner to resign.
 
“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.
 
Dodd also said he had questions about the president’s proposal regarding Chrysler.
 
“One piece that has me somewhat perplexed is whether or not we are providing funds to Chrysler in order to make their position attractive to Fiat,” Dodd said. “That’s going to raise questions in people’s minds.”
 
Using TARP money to finance a government-driven restructuring of GM and Chrysler as announced by Obama would not be legal without a congressional authorization, said Rep. Trent Franks (R-Ariz.).
 
“No, it’s not legal without congressional approval,” Franks told CNSNews.com. “The language is clear. The money is directed toward financial institutions. But that may be the least of our challenge. The president finally seems to realize that bankruptcy may be the best option. The notion that government could specify what vehicles to make is ridiculous.”
 
Sen. Orin Hatch (R-Utah) said he found the treatment of GM President Rick Wagoner troubling.
 
“It’s my understanding that the CEOs voluntarily agreed to really be the scapegoat here and I think it’s very difficult to say that the president did anything wrong there,” Hatch told CNSNews.com. “But I do not want the federal government dictating who runs corporations in this country. Now there is no question there is a lot of leverage with the federal funds. But it’s a very troubling thing that people think politicians can fire a leader of a company.”
 
Hatch added he was skeptical about the government’s ability to guarantee warrantees on vehicles.
 
“It’s tough to guarantee a warrantee if a company is out of business,” Hatch continued. “You can guarantee maybe parts, but ultimately, it is very difficult to do that without getting the government in a difficult position. It’s easy to say things like that. It’s another to do them.”