The United Auto Workers (UAW) union tapped former Michigan Gov. James Blanchard (D) as their representative to the newly-constituted Chrysler.
The union will ask Blanchard, a former Democratic governor and congressman, to represent its 55 percent stake in the new Chrysler Group, the Detroit News reported Thursday.
The move will put a solidly political figure in a major position of influence over the new GM -- but acting at the behest of the union, not anyone else.
"In his public and private sector roles, Blanchard has wide experience in the auto industry, international trade and related issues," the UAW said.
Specifically, Blanchard will help manage the union's Voluntary Employees' Beneficiary Association (VEBA) retirement account, which owns the 55 percent stake in New Chrysler.
Interestingly, Blanchard was also a figure in the Michael Moore "Roger & Me," which took aim at the effect of the auto industry (in this case, General Motors) in Flint, Mich.
Silla Brush reported this morning that the Treasury threatened to replace the board of Bank of America if it backed out of it's agreement to acquire Merrill Lynch.
In testimony just now to the House Government Reform and Oversight Committee, Ken Lewis, CEO of Bank of America, confirmed this:
LEWIS: It is true that we were true that we were told that...I can't remember the exact words....but basically if we went through with calling the [material adverse change, to back out of the deal], the government could or would remove management or the board....
The threat was not what gave me concern, what gave me concern that they would make that threat to a bank in good standing. It showed the seriousness with which they thought that we should not call a M.A.C., and so as a result of that, that was a factor in our decisions.
But there were also other considerations. You weren't considered you'd win the MAC.
We thought, given the fact that the government felt that strongly and the fact there was a risk that you would not win the mac, and then finally that you might end up not getting Merrill Lynch in any sense, even after paying the fines, that it was in our best interest, that is the bank of america shareholder's best interest, to go through with the merger.
Lewis later added that the Fed's pressure was "in good intention," but so far the hearing does not appear to alleviate any of the doubts surrounding the deal.
Vice President Biden's chief economic adviser chastised the U.S. Chamber of Commerce's new "Campaign for Free Enterprise," saying that had the group had its way on issues, the economy would have suffered more intensely.
White House economist Jared Bernstein took aim at what he said was the Chamber's "ideology" during an appearance Thursday morning on C-SPAN's "Washington Journal" program.
"I would argue that that group is missing the point," Bernstein said, defending the Obama administration's intervention in the economy. "Those are huge economic problems that greeted us when we got here."
"And to have ignored those problems because of an ideology like this group is espousing would have been a tremendous mistake, resigning this economy and American families to far deeper economic pain than has actually occurred," Bernstein added.
The Chamber said that no less than the future of capitalism was at stake in announcing its "Campaign for Free Enterprise" yesterday, which will include "aggressive issue advocacy" ahead of the 2010 elections, and will include paid advertising campaigns, new media blitzes, and grassroots organizing.
"No one's talking about changing the structure of the economy," Bernstein shot back at the Chamber. "These are temporary actions where we get into the system, take the needed action to correct a market failure, and get out of the system."
Update, 5:00 p.m.: Chamber Vice President of Communications Tom Collamore responded to Bernstein Thursday afternoon in a blog on the business group's website.
"I believe that it is Mr. Bernstein who is both missing the point and forgetting (perhaps willfully) recent history," Collamore wrote. "Our ideology, as Mr. Bernstein would call it, is simple. We believe that it is free enterprise -- the freedom to succeed through hard work, risk taking, and innovation -- that has made this country the envy of the world, not regular government intervention."
The government has no timeline to divest of General Motors, and will probably do so steadily after the new company goes public.
Ron Bloom, one of the top leaders of the auto task force, said the government will sell off its 60 percent stake in GM gradually after the company has its initial public offering (IPO).
"We would expect that would likely happen in 2010. And then after that, there will be an orderly process in which these shares will be disposed of," Bloom told members of the Senate Banking Committee during testimony on Capitol Hill Wednesday afternoon. "Once we've become a shareholder, we certainly want to achieve fair value for those shares."
Bloom said the government had no specific target as to how many years the government would like to remain invested in GM, but said the government would likely not sell out of the automaker all at once out of concern for the seismic effect of such a sell-off.
"There will be a strategy to get out: it will be to access the public markets, and sell when the time comes to be selling," Bloom said.
The former union official also insinuated that the government had little choice but to take an equity stake in GM in terms of options it had to assist the company.
Bloom said that the company could scarcely afford to issue more debt, seeing as excessive debt was key to GM's problems in the first place.
"The president did not start out with wanting to be a shareholder. But one of these company's core problems for a lot of years was that it was too highly leveraged," Bloom testified. "We were very mindful of setting up General Motors of setting up a clean balanced sheet."
One of the two major prongs of the government's bid to curb executive compensation is unlikely to have a major effect, House Financial Services Committee Chairman Barney Frank (D-Mass.) said Wednesday.
Frank said that the Obama administration's proposed role for the Securities and Exchange Commission (SEC) to provide greater independence for firms' compensation committees and that the proposed "say on pay" rules were likely to have a greater impact.
"Well, I don't agree, frankly, that we're going to get much out of making the compensation committees more independent," Frank said during an appearance on MSNBC. "I don't put much stock in it."
"Frankly, if the boards of directors had been doing their job we wouldn't be in this situation," the top Democrat overseeing financial issues explained.
Still, Frank said that Congress and the administration would work to toughen regulations for the financial services industry.
The proposed "say on pay" legislation for U.S. corporations announced by the Obama administration Wednesday would be non-binding, according to a Treasury department fact sheet.
Treasury Secretary Tim Geithner said the administration would push for so-called "say on pay" legislation, which gives shareholders an opportunity to review companies' compensation packages, as part of its bid to curb executive compensation.
According to a fact sheet released by the Treasury, that review opportunity would be non-binding.
The Treasury-backed legislation would give shareholders in companies the right to vote on the annual compensation for a public company's top five named executives, as well as an opportunity to vote on "golden parachutes" for executives who leave the company.
While the vote may not be explicitly able to veto or change compensation packages, it could have the effect of discouraging compensation shareholders might find objectionable.
The Securities and Exchange Commission (SEC) will be charged with administering the "say on pay" votes, as well as new rules on compensation committees' independence.
"Our role is really to protect investors by making sure they have all the information to make sound investment decisions," SEC Chairwoman Mary Schapiro said of the new role her own agency would receive in regulating executive pay.
President Obama sponsored similar legislation on say on pay while in the Senate.
Treasury Secretary Tim Geithner is set to meet with "leading experts on executive compensation" Wednesday morning as the Obama administration mulls regulation on executive pay.
As the Obama administration reportedly considers executive compensation regulation extending beyond companies in which the government has invested, Geithner will sit down at 11 a.m. with top federal officials and unnamed experts, according to the Treasury.
Included in the meeting will be Geithner, Securities and Exchange Commission Chairwoman Mary Schapiro, Don Tarullo of the Federal Reserve, and what the agency termed "leading executive compensation experts."
The meeting may signal that the Obama administration is moving closer to proposing some concrete constraints on compensation structuring for executives and other top earners in the U.S. economy.
The group is supposed to face a pool spray early this afternoon as the meeting concludes.
Treasury Secretary Tim Geithner downplayed suggestions that the government's stress tests of major financial institutions needed to be redone, saying national economic variables were laregely unimportant in determining their outcome.
In a briefing with reporters ahead of his trip to Italy tomorrow, Geithner downplayed TARP Oversight Committee Chairwoman Elizabeth Warren's suggestion that the economy had worsened to an extent such that the original stress tests on banks were no longer reliable measures of those institutions' health.
"The critical constraining factors in the stress tests were the loss estimates confined and the projections for future earnings," Geithner told reporters. "The macro factors and unemployment were not the binding constraints."
The government let 10 large financial institutions pay back $68 billion in bailout funds earlier today. Warren's statements were seen as publicly disputing whether or not those banks were healthy enough to repay their loans from the government.
The secretary also said that one of the most significant factors allowing for that repayment were the companies' abilities to assure investment from private sources in order to raise capital for their operations.
On a broader level, Geithner said that while the government still forecasts "significant challenges" in the economy, there are signs that the global economic downturn has begun to recede.
An Indiana pension fund suing to prevent Chrysler's government-backed sale to Italian automaker Fiat urged the Supreme Court on Tuesday to take all the time it needs to ponder the case.
Lawyers for the pensioners, who argue the restructuring plan previously organized by the Obama administration shortchanges their interests, pounced on a statement issued by Fiat's CEO in reaction to the court's stay in Chrysler's sale.
Fiat CEO Sergio Marchionne told Bloomberg News yesterday that the automaker would "never" walk away from the deal with Chrysler, despite having the option to abandon the deal by June 15th if a sale has not been finalized by that point.
"The Debtors (and the United States) have advanced the position throughout this case ... that the section 363 Sale at issue here had to close before June 15 or Fiat would exercise its right to withdraw and the entire transaction would collapse," lawyers for the Indiana fund wrote in a brief filed Tuesday. "The courts below relied on such arguments and testimony in moving this case forward at an unprecedented pace."
"The Indiana Pensioners respectfully submit that the risk of termination by Fiat if the transaction does not close by June 15 no longer provides a basis for driving the timing of these proceedings," the memo added, which was principally offered by Indiana Solicitor General Thomas M. Fisher.
10 U.S. banks that received assistance from the government at the height of the financial crisis will be allowed to pay back $68 billion on those loans, the Treasury Department announced Tuesday.
"These repayments are an encouraging sign of financial repair, but we still have work to do," Treasury Secretary Tim Geithner said in a statement announcing the repayment of money in the Capital Purchase Program (CPP).
The allowed repayments come after the banks were able to raise significant amounts of private capital to back their operations, the Treasury said.
The repaid money will go to the Treasury's general account, where it will help reduce borrowing and the national debt. The government has benefited from $4.5 billion in dividends to date from their investments under the CPP -- $1.8 billion of which came from the 10 financial institutions that will be allowed to begin repayment.
The Treasury did not name the 10 financial institutions that would be allowed to repay their loans, but among the expected firms are heavyweights JPMorgan, Goldman Sachs, and Morgan Stanley.
Most Viewed RSS Feed »
