General Motors CEO Daniel Akerson plans to roll up to Capitol Hill Thursday in a flashy new Corvette Stingray less than 24 hours after settlement talks fell apart in a lawsuit that could cost GM at least $1 billion–and add to the nearly $20 billion taxpayers have already lost on the 2009 bailout.
GM spokeswoman Heather Rosenker expects a “full house” when Akerson debuts the 450 horsepower sports car at the Capitol Hill Club. The CEO then plans to update the bipartisan gathering on the state of GM in a closed-door meeting.
“We update stakeholders just like members of congress as part of our normal operating procedure,” Rosenker said. “We’ve already put the bailout behind us because we’re doing the best we’ve ever done.”
Rosenker did not respond to follow up requests regarding the collapse in settlement talks that could leave GM on the hook for up to $1 billion and take as much as 50 cents per share of the company's stock price.
When GM went through bankruptcy, it split into two companies. “Old GM” absorbed the company’s debts. The "new" GM that Akerson leads holds the company’s assets and received $50 billion in taxpayer money during the auto bailout.
A deal between several hedge funds and auto executives to expedite the bankruptcy sparked a lawsuit filed by Old GM’s creditors.
Settlement talks between the two parties fell apart on Wednesday, a development that could unravel entirely the 2010 bankruptcy that created GM as it exists today.
Akerson, who was expected to meet one-on-one with lawmakers after the group gathering, cancelled those meetings citing scheduling conflicts, according to Hill sources.
Rep. Mike Turner (R., Ohio) was incensed when the company cancelled his meeting with the CEO. Turner hoped Akerson could shed some light on the Delphi pension scandal in which 20,000 non-union employees and retirees had their pensions slashed by up to 70 percent to speed GM through bankruptcy.
“It seems to me that he’s not prepared to answer tough questions from Congress about the billions of taxpayer dollars lost and the thousands of Delphi retirees,” Turner said. “The CEO sees the Congress as props and backdrops for his Washington unveiling … he should be doing a transparency tour rather than a victory lap.”
The visit comes four months after the Treasury Department announced that it would sell off 300 million shares of GM stock “in the next 12-15 months, subject to market conditions.” Taxpayers could lose billions on the withdrawal despite assurances from Obama that GM “repaid their loans.”
Treasury officials did not respond to questions regarding the status of its GM holdings.
Akerson and the administration have touted the company’s success in recent months, citing its reemergence as the world’s top car seller. Yet the company faces dwindling market share, turmoil from a slumping European market, and lending problems.
Critics blasted Akerson’s visit, saying it would rekindle the “Government Motors” moniker they say has hurt sales.
“GM’s leaders are preventing the rehabilitation of its traditional image and turning off customers,” said auto expert Ed Niedermeyer. “That Akerson is coming to D.C. shows that cronyism … is more important to him than … the good of the business.”
Rosenker said critics exaggerate the impact the bailout has had on GM’s ability to sell cars. She said the Treasury withdrawal will erase any lingering bittnerness over the bailout.
“The majority of the American public has witnessed 22,000 jobs kept in this country, the revenue we paid to states and cities, the folks we kept employed, and know that has far outweighed [the cost of the bailout] during both administrations,” she said. “Once [Treasury sales are] completed there will be some folks who didn’t support the bailout who will come back to us again.”
Akerson has previously acknowledged that GM sales suffered after becoming “a political punching bag” because of the bailout and production of its electric car, the Chevy Volt.
Some industry observers are skeptical that GM will be able to immediately regain its all-American image of “baseball, hot dogs, apple pie, and Chevrolet.”
“The bailout has definitely hurt GM … because there are plenty of people out there who still harbor resentment over the fact that GM got taxpayer money,” said former GM marketer Peter De Lorenzo. “The Treasury Department's withdrawal will ultimately benefit GM but the perception of GM as a ‘tainted’ company will linger for years to come.”