Car czar more likely a banker than gearhead

Robert Snell / The Detroit News

A federal appointee overseeing emergency federal aid should have a banking background and not narrow expertise in the auto or manufacturing sectors, management and industry experts said Tuesday.

The so-called "car czar" should have the disposition, good judgment and negotiating skills of a banker to extract transformational cuts from automakers and enforce conditions that will ensure the companies become profitable and repay up to $15 billion in taxpayer-funded aid, experts said. The car czar also should have enough power to cut off funding if Detroit's Big Three automakers fail to implement the changes fast enough.

"You don't need somebody who's spent his or her life in the auto industry because a lot of people are so close to it they may have become slaves of their own myths about what the industry ought to look like," said Gary Burtless, a labor economist with the Brookings Institution, a Washington, D.C.-based public policy group.

The reaction came as House Speaker Nancy Pelosi, D-Calif., gave automakers some indication Tuesday she favors a "car czar" with a banking background. She suggested Paul Volcker, a former Federal Reserve chairman and now an economic adviser to President-elect Barack Obama, would be a good choice. She also said Monday that she wouldn't want to see former General Electric Co. Chairman Jack Welch in the job.

Other names that have surfaced in recent days include billionaire auto racing legend and Detroit-area industrialist Roger Penske, who was unavailable for comment Tuesday. Another name that has been mentioned is Kenneth Feinberg, an attorney who oversaw the Sept. 11 victims' compensation fund, but it is largely unknown how his name surfaced. U.S. Rep. Barney Frank, D-Mass. has said that he thinks that the media "made that up."

Volcker, meanwhile, met behind closed doors Tuesday with congressional Democrats to talk about the auto industry and the stimulus package.

Asked if he was interested in becoming the car czar, he joked: "I'm looking for new jobs."

Czar may lead experts' team

He said the restructuring plans filed by the Detroit automakers last week didn't go far enough.

"Obviously they've got to press harder. They're part-way there," he told The Detroit News.

One possibility is having the czar head a team of experts with a range of specialties who could supervise short-term lending as well as long-term efforts to help the companies become viable businesses.

Such oversight boards have been installed by the government in the past for Chrysler Corp., the nation's airlines and other sectors that received federal aid.

Some of the czar's powers could include approving any transaction of more than $100 million made by an automaker that takes federal loans. General Motors Corp. and Chrysler LLC have submitted plans outlining how each would spend federal aid and restructure the companies. Ford Motor Co. has asked for a $9 billion "stand-by" line of credit.

The car czar would also be required to call back the government loans "at the end of the bridge period if he can't certify that they're executing a plan for viability," a senior Bush administration official said late Tuesday.

Debate over qualifications

The country's oldest and largest industrial trade group representing 14,000 manufacturers agrees a banker might make sense instead of an automotive or manufacturing insider.

"We don't think it needs to be anybody with a manufacturing background," said Hank Cox, spokesman for the National Association of Manufacturers, which is headed by former Michigan Gov. John Engler. "The czar is somebody whose job it is to make sure the terms of the loan are met. It's not somebody who's going to tell the companies how to manage their businesses."

Finance is the most important skill any car czar should possess but the person also should be well-versed in product development and manufacturing -- a rare combination, said George Peterson, president of industry consultant AutoPacific Inc. in Tustin, Calif. Potential candidates should also be versed in navigating Capitol Hill, he said.

"Man, I don't know a soul who would be good at that," he said, though he acknowledged Penske and Nissan Motor Co. CEO Carlos Ghosn would be good choices.

A czar with strictly a financial background would be "disastrous," said Glen Dowell, an assistant professor at Cornell University's Johnson Graduate School of Management.

Bankers make safe bets that, in this case, might protect taxpayers' investment, but could fail to transform an ailing industry, he said.

As an example, Toyota made a risky bet years ago building hybrids while domestic rivals built SUVs.

"If you believe this is a key moment in automotive history, you don't survive by making safe bets," Dowell said.

Detroit's Big Three automakers have not objected to a car czar appointment. During an interview Tuesday on CBS's "The Early Show," GM Vice Chairman Bob Lutz said he could accept the proposal.

"Well, whether we need it or not, I think it's reasonable that when the federal government steps in with taxpayer money, they're not going to -- they're not going to lend us the money and just say, 'Do the best you can with it and tell us when you need more,' " he said.

Staff Writer David Shepardson contributed to this report. Reach Robert Snell at (313) 222-2028 or rsnell@detnews.com.