Daniel Howes: Commentary

Feds flex political muscle at automakers

This is what you get, Detroit, when the government becomes your lender of last resort -- a business plan designed to score political points.

No bonuses for the top 25 execs and no corporate aircraft (leased or owned) for as long as Detroit's beleaguered automakers owe the public money, which could be three years but probably more.

Compliance with federal and state fuel efficiency requirements to develop alternative technology vehicles, even as you're required to achieve "positive net present value" amid gyrating financial, retail and oil markets. Neat trick if you can pull it off.

No dividends. Restructured balance sheets. No legal challenges to state greenhouse gas emissions rules, and, my personal favorite, agreement to assess the viability of converting SUV plants to the production of buses and rail cars for use by public transit agencies.

No wonder Ford Motor Co. doesn't want any part of the $15 billion morass taking shape in Washington. It gives new meaning to the term "loan shark," however predictable it all is, considering the political agendas inside Congress and, second, the abject financial weakness of General Motors Corp. and Chrysler LLC.

They don't have a choice this side of bankruptcy court.

"We will not give up on our automotive industry," House Speaker Nancy Pelosi, D-Calif., said. She won't give it a free ride, either. She expects all stakeholders, from unions and management to bondholders and dealers, shareholders and suppliers, to sacrifice big to deliver "viability plans" by March 31 to the Obama administration.

"We call this the barbershop -- everyone is getting a haircut," she said. And if they don't? "We may want our money back sooner."

I'm not sure which is worse: A federal government presumptuous enough to think it can transform one of the country's most complex industries in a little more than three months. Or one readily prepared to use its emergency financial power to shape an industry and steer it toward political ends that may or may not reflect market demand.

"Beggars can't be choosers," says John Casesa, managing director of Casesa Shapiro Group in New York. "What we have here now is only meaningful to the extent they live to fight another day. The future of the U.S. auto industry is in the hands of the next president."

No question. Each step in this process feels more strange than the last -- a first round of congressional hearings that gave new meaning to the term "clueless Detroit," a second round long on detail and even longer on groveling, stunning ignorance in Washington of an industry that accounts for millions of jobs, an uninterested White House and, now, a bailout bill that reads as if is was drafted by Greenpeace and Soviet central planning.

None of that broaches the hypocrisy. The congressional committees that wrote a $700 billion financial bailout package, lent $150 billion to AIG and pumped $20 billion into Citigroup demand detailed plans from the automakers and four days of hearings for what's shaping up to be $15 billion in loans.

Or the chairman of the Senate Banking Committee, Chris Dodd, D-Conn., suggests Sunday that GM Chairman Rick Wagoner should "go" and make way for new leadership because the current one led GM off a cliff.

This from the senator who blocked reform of Fannie Mae and Freddie Mac three years ago, was their top recipient of campaign cash, pocketed more than $300,000 in contributions from PACs and executives tied to Citigroup and then spearheaded the legislative effort to craft the financial rescue package.

Yet in the world where Detroit's future lies, such irony doesn't matter. Perception, politics and calculated remarks masquerading as offhanded ones do, such as Dodd's "Face the Nation" ode to resignation.

Wagoner would go, and soon, if doing so assured the votes needed for the bridge loans. Why? First, as much as Wagoner's leadership in difficult times may win him respect inside GM, its boardroom and among some industry analysts -- that is, inside the Detroit Bubble -- his record on market share, net income, earnings and share price is indefensible in the Bigger America.

Second, at his core Wagoner is a decent man who'll do what's necessary to help GM. The 31-page "Auto Industry Financing and Restructuring Act" doesn't say anything about replacing executives. But considering who's writing the loan and why, it may not have to.

Daniel Howes can be reached at (313) 222-2106 or dchowes@detnews.com or detnews.com/howes.