Obama aide: Bailed-out car makers on right track

5/11/2010

EAST LANSING, Mich. - General Motors Co. and Chrysler Group LLC are recovering from bankruptcy better than expected, but "they're not out of the woods yet," said Ron Bloom, senior manufacturing adviser to President Obama.

Mr. Bloom said yesterday the administration is pleased with the management of the two companies and is "hopeful, cautious … not yet confident" that they'll fully recover.

He also said he hopes GM can begin selling shares of stock to the public by the end of the year.

"We're not putting a firm line in the sand. We're hopeful they'll be able to do it by the fourth quarter," said Mr. Bloom, who was instrumental in designing the federal government's bailout of the automakers.

Mr. Bloom spoke to reporters along with U.S. Sen. Debbie Stabenow (D., Mich.) at her East Lansing office before speaking to the Michigan Manufacturers Association yesterday afternoon.

Mr. Bloom said Chrysler's first-quarter profit and GM's payback of its $7.1 billion federal loan five years early are good signs.

"Clearly they're taking their own fate in their hands. They're making real changes," he said of GM and Chrysler.

Meanwhile, former U.S. auto task force head Steven Rattner said during a separate speech in Detroit yesterday that GM and Chrysler have performed better than he expected they would a year ago.

GM has a good possibility of making a quarterly profit when it announces first-quarter earnings this month, he said.

The government owns 61 percent of GM and will get some of its money back when the stock is sold. GM repaid $6.7 billion of the government loans last month.

"I think the preliminary view is they have learned the tough lessons of a near-death experience. We feel they're on the right track," Mr. Bloom said.

The intention is to eventually sell all of GM's stock in public offerings, he said.

Asked how soon that would happen, he said, "As soon as practical." He said it's impossible to sell those shares all at once, so it will take years to divest. The government also owns 9.9 percent of Chrysler.

Ms. Stabenow said more of her Senate colleagues are realizing the difference between the government's bailout of GM and Chrysler and large banks, and are more accepting of the assistance to GM and Chrysler.

The automakers "were victims of the financial crisis. They didn't cause the financial crisis," she said.