WASHINGTON -- The Obama administration's ability to decide when and how to sell its stakes in General Motors Co. and Chrysler Group is undercut by the rapidly declining staff of the auto task force and its accompanying loss of expertise, Congress' watchdog says.
The task force has lost eight of its 12 professional staff members since early this year, the Government Accountability Office reported today.
In addition, the head of the Treasury Department-run task force, Ron Bloom, was also recently appointed senior counselor for manufacturing policy, forcing him to split his auto industry time, said the report by the GAO, the investigative arm of Congress.
Finally, even more staff reductions are likely as the task force continues to wind down, the report said, citing Treasury officials.
“We are concerned that Treasury may not have sufficient expertise to actively oversee and protect the government's ownership interests, including determining when and how to divest these interests,” the 31-page report said.
The GAO's three-month review also found that:
• The administration requires the automakers to try to meet certain domestic production requirements. GM must “use its commercially reasonable best efforts” to keep U.S. production at 90 percent or more of the level in its business plan. Chrysler must manufacture 40 percent of its domestic sales in the United States or keep domestic production at 90 percent or above of its 2008 total.
• Treasury officials said the government is likely to sell its stake in GM through a series of public stock offerings and its Chrysler share through a private sale. But they added that if the companies don't become profitable, they will consider other options including liquidating the government's stake.
• GM and Chrysler are unlikely to grow nearly enough to enable taxpayers to recoup their investments in the companies.
The federal government, after providing $81.1 billion to the domestic auto industry in 2008 and 2009, owns 9.85 percent of Chrysler and 60.8 percent of GM.
The U.S. stake in Chrysler will fall to 8 percent if Fiat S.p.A., which controls Chrysler, meets certain fuel-efficiency targets and gets additional equity, the report said.
Bloom has said that the administration is a "reluctant shareholder" in GM and Chrysler but that it would be irresponsible to give away the equity stake “to which taxpayers were rightly entitled."
Treasury responded to the GAO's concerns by saying it has enough bailout staff who work on matters outside the auto industry to fill in gaps left on the task force.
“Treasury continues to assess and take steps to maintain the expertise required to adequately monitor and manage Treasury's interests in Chrysler and GM,” the department's risk and compliance officer, Duane Morse, said in an Oct. 23 letter.
“In addition, Treasury will continue to monitor and evaluate the performance of Chrysler and GM with a view toward determining the appropriate method and timing for divesting Treasury's interests.”
Among the task force members who have left are former task force chief Steve Rattner, Harry Wilson, Matthew Feldman, Malik Sadiq, and Clay Calhoon, a Treasury spokeswoman said.
Remaining are Bloom, Brian Osias, David Markowitz and Brian Deese, she said.
The task force draws on the expertise of other Treasury officials, the White House, and departments outside Treasury, the spokeswoman said.
The GAO noted that the administration has not set up a unit specifically to oversee federal investment in the car companies, nor has it told Congress how it plans to use the automakers' financial reports to monitor their performance.
Auditors also interviewed a number of industry analysts who said Treasury should employ staff or hire contractors with experience managing and selling stock in private companies.
To view a copy of the GAO report, click on: