A bill to undo a critical component of the Obama administration's bid to restructure both General Motors and Chrysler through bankruptcy has now gained a majority of supporters in the House.
The Automobile Dealer Economic Rights Restoration Act has now secured 221 cosponsors in addition to Rep. Dan Maffei (D-N.Y.), who introduced the bill.
The legislation would force GM and Chrysler to restore auto dealers' franchise rights if the dealer requests such a thing. In essence, the bill could reopen as many as 789 Chrysler dealers and 1,300 GM dealerships each company had to close as part of the cuts leading to their bankruptcy proceedings.
Those filings were organized by the Obama administration and its auto task force, setting up a potential conflict between a normally friendly Congress and the White House.
It also pits the automakers against their onetime dealers.
"This legislation, if passed, would put our long-term viability at risk," GM spokesman Greg Martin told the Detroit Free Press.
An association of former dealers, meanwhile, praised the bill.
"A majority of the US House of Representatives, an astonishing 222 Members, and a quickly growing number in the Senate, from both parties, now fully recognize what is clear to the American people: the leadership of GM and Chrysler made a horrible mistake by their arbitrary termination of profitable dealerships," said Jack Fitzgerald and Alan Spitzer, the co-chairmen of the Committee to Restore Dealer Rights.
A finalized General Motors bankruptcy will still have to clear the hurdles that faced Chrysler after an appeal to a federal judge's approval of GM's bankruptcy was filed Monday.
A notice of appeal on behalf of consumer advocates was filed against a judge's decision last night to okay the sale of old GM assets to a new, government-backed GM, the Detroit Free Press reported.
The consumer advocates claim that the prestructured bankruptcy would water down the ability of accident victims to make claims against the company.
The holdup on closing the deal mirrors the claims made against Chrysler, though a federal circuit court upheld the Chrysler deal, and the Supreme Court refused to take up the case -- only after a temporary stay was issued by Justice Ruth Bader Ginsburg.
While the GM bankruptcy is significantly larger in scale, the Supreme Court signaled a disinclination to disrupt the carefully engineered deals assembled by the troubled automakers and the Obama administration.
Chrysler appointed eight new members to its board of directors today, rounding out the group that will oversee Chrylser as it tries to move out of bankruptcy.
The eight new members--who will join Chairman Robert Skidder--include:
-Alfredo Altavilla, CEO of Fiat Powertrain Technologies
-James Blanchard, former U.S. Congressman and Governor of Michigan
-George F.J. Gosbee, Chairman, CEO and President of Tristone Capital Inc
-Sergio Marchionne, CEO of Chrysler Group LLC and CEO of Fiat S.p.A
-Douglas Steenland, former CEO of Northwest Airlines
-Scott Stuart, a founding partner of Sageview Capital LLC
-Ronald L. Thompson, Chairman of the Board of Trustees for Teachers Insurance and Annuity Association (TIAA)
-Stephen Wolf, Chairman of R.R. Donnelley & Sons Co.
The Treasury Department released a statement praising the new board.
"With today's announcement of the final appointments to Chrysler's Board of Directors, the nine member board is complete, and Chrysler is positioned to move toward a viable future," the statement reads. "The new board hosts a wide range of experience in global corporate leadership, which we are confident will help drive the innovation, discipline, and adaptability needed for long-term viability."
Congress shouldn't be in any rush to pass through some reforms of the financial sector, Rep. Paul Kanjorski (D-Pa.) argued Wednesday.
Kanjorski, chairman of the subcommittee on Capital Markets, Insurance, and GSEs, said during an apperance on CNBC that Congress should favor doing the reforms well over doing them quickly.
"Let's take our time. Let's analyze the implications and the effects of the laws and regulations," Kanjorski asserted. "And if it takes three more months or six months, what does it matter? Get it done as correct as possible."
Kanjorski was specifically referring to one key project of his, expanding whistleblower protections for those who alert federal regulators to financial malfeasance.
Congressional leaders signaled yesterday that they would take up draft legislation to establish a consumer financial protection agency introduced by the Obama administration quickly. House Financial Services Committee Chairman Barney Frank (D-Mass.) said he hoped to move on the legislation before the August recess.
"I think we have to step back and say, 'Look, rather than running and try to get something done so we can all say this will never happen again and we've solved the problem' -- that's nonsense," Kanjorski said.
The Treasury Department released a copy of proposed legislation on Tuesday to establish a Consumer Financial Protection Agency to oversee different elements of the American financial services sector.
The legislation would establish a "National Bank Supervisor" and an independent agency within the executive branch, headed by a presidential nominee.
According to the legislation, the new agency would "seek to promote transparency, simplicity, fairness, accountability, and access in the market for consumer financial products or services" and be able to craft new regulations to carry out that mandate.
The legislation, promised by President Obama and Treasury Secretary Tim Geithner, is a core part of the administration's initiative to overhaul U.S. financial regulations. Geithner had signaled last week that legislation to centralize consumer protection was forthcoming.
Still, the proposed consumer protection "czar" has been the core of business groups' opposition to elements of Obama's regulatory overhaul, with those groups -- joined by some conservative Republicans in Congress -- worrying that the new agency would only add to bureaucracy instead of streamlining regulation.
Convicted financier Bernard Madoff was sentenced to 150 years in prison on Monday after pleading guilty to running the largest Ponzi scheme in history.
A federal judge in New York sided with prosecutors in the case, giving Madoff the maximum possible sentence in the case.
The sentence virtually guarantees that the 71-year-old Madoff will spend the rest of his life in prison.
Madoff pled guilty to running a $64 billion fraud in March, stealing billions from prominent individuals who'd invested in his fund.
Judges also ruled recently that Madoff's remaining assets would be sold off to benefit those he defrauded, though that amount pales in comparison to the billions he lost.
The Cleveland Plain-Dealer just ruined some lawmakers' weekends.
In a report published last night, the Plain-Dealer flagged a number of worrisome stock transactions made by members of Congress--including some on House Financial Services Committee--during the bailout frenzy late last year.
The instances cited by the Plain-Dealer certainly do seem to raise some question. For example:
Rep. Ginny Brown-Waite, a Florida Republican, bought Citigroup stock valued between $1,001 and $15,000 on Oct. 2, the day before the House passed the financial rescue bill and President George W. Bush signed it into law, records show. She opposed the bill.
Eleven days later, she bought $1,001 to $15,000 worth of Bank of America stock. It was on the same day that then-Treasury Secretary Henry Paulson told leading banks that he expected them to accept billions in bailout money to prevent a financial meltdown.
Brown-Waite was on the Financial Services committee at the time. Her office refused to comment for the piece.
And there's more:
[Rep. Charlie] Wilson, a Democrat from the eastern Ohio town of Bridgeport, sold between $15,001 and $50,000 worth of Huntington Bancshares stock on Nov. 14, the same day Huntington got $1.4 billion in bailout money from the federal Troubled Asset Relief Program, or TARP, records show. Wilson's transactions over the course of last autumn also included Bank of America and BB&T, both beneficiaries of the bank rescue program that Treasury implemented after congressional passage.
Wilson's spokeswoman said the congressman did not personally pick these trades because he leaves day-to-day investment decisions to a money manager who uses a proprietary model in selecting securities to buy or sell.
Rep. Carolyn McCarthy (D-N.Y.) used the same defense as Wilson--that she is not in control of her transactions--when the Plain-Dealer questioned her about buying $2,275 of JP Morgan stock while Congress was crafting a bailout for the company.
The reports also cites transactions by Rep. Jackie Speier (D-Calif.), Rep. Shelley Moore Capito (R-W.V.), and Rep. Judith Biggert (R-Ill.)
Michigan lawmakers appear to have gotten their way after General Motors selected a location in their state to build a new plant dedicated to manufacturing smaller automobiles.
The entire Michigan delegation had furiously lobbied GM, which is going through a government-financed period of bankruptcy, to choose the location they ultimately did.
GM had been considering Orion, Mich., Spring Hill, Tenn., and Janesville, Wisc. as its options to locate its new manufacturing operation.
The lawmakers had written letters to GM leadership and launched a very public "Make it in Michigan" campaign to keep the plant in the longtime home state to the auto industry.
In related news, GM announced Thursday that it had received the go-ahead for $33.3 billion in debtor-in-possession financing from the U.S. and Canadian governments.
Federal Reserve Chairman Ben Bernanke might be caught in what "some people" might call a lie, Rep. Darrell Issa (R-Calif.) said Thursday.
Issa predicted that the testimony of former Treasury Secretary Henry Paulson and other officials before Congress would contradict Bernanke's claims this morning that he did not threaten Bank of America to follow through with a deal to acquire Merrill Lynch in late 2008.
"When Paulson comes in in two weeks, and perhaps others, I think what we're going to see is what some people would call a contradiction, others would call a lie, some people would call a failure to report, others would call a cover-up," Issa told the Fox Business Network in a telephone interview.
Issa, the ranking member of the Oversight Committee, had accused Bernanke on Wednesday of orchestrating a "cover up" of details from regulators and shareholders that might have halted a BoA-Merrill deal.
"But no matter what, those definitions, once you get past the subtlety of those definitions, those are real events that should not have happened," Issa said.
Issa also added that while Bernanke may not have made explicit threats to Bank of America, "they led to results of real threats being issued."
"He may not remember these things, but they led to results of real threats being issued," Issa said.
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