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Detroit 3 bailout likely to come with 'car czar'

Detroit 3 bailout likely to come with 'car czar'

Ralph Hanson

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1 810 views Dec 8, 2008

The funds would be distributed by a single overseer, dubbed 'car czar' by politicos

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With the legislation for a loan package to secure the immediate futures of the Detroit 3 is reaching the 'discussion draft' stage today, talk of an overseer to administer the funds has begun. The bill actually stipulates that there may be multiple overseers, raising the possibility of an oversight board or committee, but one man is already being tipped as the czar.

Key details of the proposal , bearing the short title "Auto Industry Financing and Restructuring Act", relating to the administration of funds include: the czar's (or board's) ability to prohibit a carmaker merger or sale, the czar's ability to inspect the financial records of any carmaker or majority shareholder accepting funds under the act, and the czar's duty to periodically evaluate the carmakers efforts and report their compliance that is designed to keep the Congress (and presumably the public) apprised of the use of the loan funds and the companies' restructuring plans.

Congressional officials are considering Kenneth Feinberg, the lawyer that handled the September 11th Victim Compensation Fund, for the car czar post, reports the AP. No other candidate names have yet been mentioned, and the general consensus around Washington appears to be that Feinberg's appointment is all but done.

Feinberg, in addition to serving as the special master in charge of the September 11th fund, has also performed several other notable roles as arbitrator, including being one of three chosen to determine the valuation of the original Zapruder film of the John F. Kennedy assassination, and one of two chosen to determine the allocation of legal fees in Holocaust slave labor litigation.

The loans themselves will be issued for seven-year terms, with 5% interest during the first five years and 9% during the remainder. The act's stated goals for the financing include: stimulating manufacturing and sales of automobiles by carmakers in the U.S., enhancing the ability and capacity of the domestic industry to pursue fuel-efficient advanced technology vehicles, preserving and promoting the jobs of 335,000 workers directly employed by the industry and another 4,500,000 jobs in ancillary sectors, safeguarding the retirement benefits of 1 million retirees, and keeping U.S. carmakers competitive yet also minimally harmful to the environment.