Republicans call for investigation into political favoritism in auto restructuring
By: Susan Ferrechio
Chief Congressional Correspondent
June 3, 2009
Two top House Republicans are calling for an investigation into the Obama administration's handling of the way Chrysler and General Motors filed for bankruptcy.
Reps. Jeb Hensarling, R-Texas and Spence Bachus, R-Ala., say some stakeholders were given preferential treatment by Obama's Auto Task Force in the restructuring of the two auto giants and they want the House Financial Services Committee to hold oversight hearings.
Spencer is the top Republican on the panel and Hensarling is the ranking member on one of its subcommittees.
Some small bondholders have been critical of the restructuring deal, saying the United Auto Workers union walked away with a much better deal after agreeing to forgive some of the debt owed by the carmakers to their healthcare fund.
"The possilibity that some have been unfairly treated raises a far bigger concern that the government's handling of the GM and Chrysler restructuring may have serious, long-term consequences for our capital markets if investors and creditors conclude that careful expectations built on the fixed bedrock of our laws can be set aside by government fiat," Hensarling and Bachus said in a letter to Financial Services Committee Chairman Barney Frank, D-Mass.
"Chairman Frank should join with Ranking Member Bachus and me to ensure that taxpayer dollars were not used to give preferential treatment to the administration’s political allies," Hensarling said. "If investors perceive that political might, rather than the rule of law, governs the financial markets, it will greatly discourage further participation in our markets, extending our economic downturn."
Hensarling is also the lone Republican lawmaker on the Congressional panel overseeing the $700 billion in government funds giving last fall to the GM, Chrysler and the ailing financial sector. Hensarling said that panel will hold an oversight hearing in July that will investigate the favoratism claims by the bondholders.
