The United States House of Representatives has approved a $14 billion government rescue package for the auto industry, but the proposal now faces stiff Republican opposition in the Senate. Now it's up to the Senate to decide whether the taxpayer-financed bailout should be used to rescue Detroit's automakers.

The Democrats' draft proposal bill would provide emergency bridge loans totaling about $15 billion to the foundering automakers, particularly General Motors and Chrysler, which are in the greatest danger of financial collapse.

In addition to restrictions on executive compensation and equity stakes for the government, the bailout proposal requires the companies to provide the government with detailed plans for their viability by the end of March. Central to the measure is the establishment of the "president's designee" — or "car czar," as the position has come to be known — who would manage the bailout process.

The Wall Street Journal (subscription required) reports that Republicans are concerned "about whether the proposed 'car czar' [...] would have the power to force concessions needed to return the industry to sound financial footing."

"In proposing a single presidential-designee as the supervisor of the auto bailout plan, congressional Democrats decided not to pursue the creation of an oversight board that would have included five cabinet secretaries and the head of the Environmental Protection Agency," the International Herald Tribune notes.

The industry czar, who would be named by President George W. Bush before he leaves office next month, would have the power to convene meetings of stakeholders in the auto companies, including labor unions, creditors, suppliers, automobile dealers and shareholders.

"A car czar faces a series of challenges, such as dealing with a wide range of bondholders, haggling with unions and trying to satisfy lawmakers' calls for higher fuel efficiency," the Washington Post says. "It appears as though the legislation being crafted will set many general goals, with few specifics."

Herewith, the proposed duties of the "car czar," according to the discussion draft:

• Determine how much loan money each company gets, using the automakers' requests as a guide;

• Determine "appropriate measures" for assessing each automaker's progress in carrying out their restructuring goals;

• Determine if the car companies are acting in "good faith" if they can't get restructuring plans in by March 31; and, if their faith is good, give them an extra 30 days to finish the plans;

• Determine whether to provide "long-term financial assistance" to help make their restructuring plans a reality;

• Determine allocation of loans, based on the automaker's proximity of demise, the potential impact of failure on the economy and its restructuring plan;

• Determine whether the original, seven-year loans need to be extended, and if so, determine the extended repayment plan;

• Examine any financial books, company records and other data of the companies and those of any subsidiary or affiliate;

• Approve or veto "any asset sale, investment, contract, commitment, or other transaction" worth $25 million or more (i.e., czar ultimately has final say on any major business move);

• Determine the "consequences for failure to comply" (i.e., decide how to punish the car companies if they aren't making adequate progress);

• Determine whether to take equity (invest) in the car companies using taxpayer money, and if so, decide how much equity to take;

• Determine what qualifies as exorbitant executive compensation, including inappropriate executive bonuses or incentive compensation and golden parachutes — and prohibit it; and

• Determine whether he or she needs additional powers, and if so, submit a report to Congress asking for them.

If the companies fail to come up with viable restructuring plans by March 31, the czar would have to submit his or her own blueprint to Congress for a government-mandated overhaul.

According to a circulated draft, the president's designee must have "appropriate expertise in such areas as economic stabilization, financial aid to commerce and industry, financial restructuring, energy efficiency, and environmental protection."

So, to summarize: The judge, jury and executioner of the nation's auto industry needs to be a watchdog, environmentalist, management guru and an expert in economic policy, business finance and people relations.

If he or she knew something about the car industry, that would probably be helpful, too.

Earlier

Detroit States its Case for Relief

The Bailout Debate: For the Rescue

The Bailout Debate: Against the Rescue

Resources

H. Res. 1534: Providing for Consideration of the Bill to Authorize Financial Assistance to Eligible Automobile Manufacturers, and for Other Purposes
Discussion Draft (12/8/08), Bill H.R. 7321 (12/10/08)

House Passes Rescue Plan for Big 3
by Gregg Hitt
The Wall Street Journal, Dec. 11, 2008

U.S. Auto Bailout Deal Advances as Democrats Offer Draft Bill
By David M. Herszenhorn
International Herald Tribune, Dec. 9, 2008

Wanted: Crisis Manager in Chief
by Steven Mufson and Thomas Heath
The Washington Post, Dec. 10, 2008