Congress to add more oversight to auto makers

NY Times:

Congressional Democrats were drafting legislation Sunday for tight government control of the crippled American auto industry, including the possible creation of an oversight board made up of five cabinet secretaries and the head of the Environmental Protection Agency and led by an independent chairman or “car czar.”

While the form of oversight was still to be negotiated by Congressional Democrats and the White House, the talks made clear the extent to which the auto companies would have to submit to substantial government supervision in order to receive a taxpayer-financed bailout.

Whatever oversight entity is created, it would direct the drastic reorganization plans that the auto companies have said they were willing to undertake in exchange for billions of dollars in short-term government loans to keep them in business, a senior Congressional aide said. A main factor complicating the deliberations was the imminent transition between the Bush and Obama administrations.

The discussions of how strong a hand the government should take with the auto industry came as Congressional and White House negotiators sought to put the final touches on emergency bridge loans of about $15 billion to keep General Motors, Chrysler and Ford afloat.

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It is not unusual for lenders to get more involved in the business decisions when a borrower is in trouble. The problem with this deal is that Congress is more responsible for the problems than the automakers and the kind of oversight being suggested will only make matters worse.

The auto business can be very profitable when sales reach a certain level. None of the things Congress is proposing will generate much in the way of sales. People are not buying autos right now because of anxiety about their future income and not because of mileage standards or pollution controls. All those fuel efficient foreign cars are piling up at the docks now too.

What needs to be done is find a way to give incentives to purchasers. There is little in this oversight proposal that would appear to do that.

Democrats have been trying to talk the country into a recession ever since George Bush was first elected. They manage to push us into one by making lenders make bad loans to people who could not afford them. Now that they have put us in that position they seem determined to compound their screw up with control freak government.