Skeptical Congress wants to know why it deserved fed cash
David Shepardson / Detroit News Washington Bureau
Washington -- The chief executive of GMAC Inc. will testify before a congressional panel next week about the finance company's $17.2 billion government bailout.
The Congressional Oversight Panel, created to oversee the $700 billion fund used to rescue Wall Street and the auto industry, will hold a hearing Thursday that will be attended by GMAC CEO Michael Carpenter and Chief Financial Officer Robert Hull.
Ron Bloom, the Obama administration's senior adviser on manufacturing, also will appear. Bloom was a key member of the federal task force that orchestrated the bailout of General Motors and Chrysler and pushed the automakers into bankruptcy. The bailout included aid for GMAC, a critical link in the auto financing network, to keep funds available to finance vehicle purchases by dealers and consumers.
The Treasury Department holds a 56 percent majority stake in GMAC, which was wholly owned by General Motors Corp. until 2006.
In a report last month, the oversight panel criticized the $17.2 billion bailout of GMAC and the three rounds of federal aid it has received. The last infusion, $3.8 billion, came Dec. 30. Since then, panel members have been eager to question GMAC and Treasury officials to justify the aid.
GMAC spokeswoman Gina Proia said the company will share with the panel "details of our turnaround plan."
GMAC lost $10.3 billion in 2009 amid heavy losses in its troubled mortgage unit, Residential Capital.
The government's bailout of GMAC has come under harsh criticism from many in Congress and others.
Sen. Bob Corker, R-Tenn., argued last fall that "continuing life support to an institution like GMAC is a major mistake," and that the government must get out of the business.
"At what point are we going to stop propping up zombie institutions to support industrial policy through our banking system," Corker asked.
The panel said Treasury hasn't done a good job explaining to taxpayers its investment in GMAC. Treasury officials argue that if the agency had refused to give GMAC more money "after providing assistance to GM and Chrysler, it would undermine its own investments in the automotive companies."
Proia noted that GMAC is financing dealers who account for more than 80 percent of GM vehicle inventory and over 70 percent of the Chrysler vehicle inventory.
From The Detroit News:
http://detnews.com/article/20100220/AUTO01/2200351/1148/auto01/GMAC-head-to-testify-on-bailout#ixzz0g4L3j18P
