The bank holding company, which provides financing for General Motors and Chrysler vehicles and dealerships, is in negotiations with the U.S. Treasury to get additional money from the $700-billion TARP fund, the paper said. GMAC is the only one of 10 banks, (which were deemed earlier this year in need of raising more money or improving the quality of their capital to withstand worse-than-expected financial conditions) to have failed in increasing their capital enough to “meet or exceed their required capital buffers,” according to a Federal Reserve Board statement, the Free Press reported.

Late last month, it was first reported that GMAC was seeking a third bite of federal bailout money, the paper said. The financial services company has already received $12.5 billion in government help and is reportedly seeking up to $5.6 billion more in loans, the story said. (Detroit Free Press)

The task force has lost eight of its 12 professional staff members since early this year, the Government Accountability Office reported today, the paper said. In addition, the head of the Treasury Department-run task force, Ron Bloom, also recently was 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.

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, the paper said. The GAO noted that the administration has not set up a unit specifically to oversee federal investment in the auto companies, nor has it told Congress how it plans to use the automakers’ financial reports to monitor their performance, the story said. (Automotive News)

“We imagined that the collapse of the automakers could devastate the Midwest beyond imagination,” Steven Rattner wrote in Fortune magazine, the Free Press said. “We were determined not to fail.”

Rattner wrote that task force members were appalled by “the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.” In the article, he defends GM Chairman Rick Wagoner’s removal and says the task force eventually gave the firms “the best possible chance to succeed,” the Free Press said.

Rattner, a private equity investor and well-connected Wall Street player, oversaw the $80-billion effort that led GM and Chrysler through bankruptcy, giving the government a 61 percent stake in GM and an 8 percent stake in Chrysler, the paper noted. While the task force had just five weeks to ramp up before a March 31 deadline, Rattner said it decided early on to remove GM Chairman and Chief Executive Officer Rick Wagoner as part of the cultural changes needed at the automaker, especially when the group found a February turnaround plan sorely lacking, the story said.

Wagoner’s departure was “a bigger part of the story than it should have been,” Rattner said in the article. “I was stunned by the suggestion that the government, GM’s only source of fresh capital, was somehow out of bounds for asking for the resignation of a CEO who had lost $13 billion of taxpayer money in three months and was now asking for more,” the story said. (Detroit Free Press)

Scheduling of the Sept. 30 meeting follows months of congressional pressure on both sides to begin discussions, the trade paper said. The talks are intended as an alternative to legislation that would have reversed termination of 789 Chrysler dealerships and halted GM’s plans to shutter 1,350 stores by October 2010, the Automotive News said. The legislation passed the House but stalled in the Senate, the paper said.  (Automotive News) 

(The Chrysler Group issued the following statement regarding the congressional meetings this week with NADA:)

“Chrysler Group LLC is working with the offices of Sen. (Richard) Durbin and Rep. (Steny) Hoyer to engage in constructive dialogue with key groups representing the dealerships whose contracts have been rejected, including the National Automobile Dealers Association. We appreciate Sen. Durbin’s and Rep. Hoyer’s leadership on this issue and look forward to having confidential meetings with frank discussions regarding the concerns of the dealers, the general state of the automotive industry and the U.S. dealer network in particular.”

The audit will take place at the same time that dealer-rights negotiations are due to get under way, involving the two automakers, dealer groups, key lawmakers and the Obama administration’s auto task force, the story said. A separate audit likely will be conducted of Treasury’s ownership and management of GM since the company emerged from bankruptcy, the Automotive News said.

In written testimony due to be delivered today before the Senate Banking Committee, Neil Barofsky, special inspector general for Treasury’s $700 billion Troubled Asset Relief Program said his dealer audit “will examine the process used by General Motors and Chrysler to identify which automotive dealerships should be maintained or terminated.”

Some dealers have complained that the process was arbitrary and resulted in the closing of profitable stores, the publication said. GM and Chrysler say the terminations were carefully chosen to increase the automakers’ prospects for restoring profit after bankruptcy, the story said. (Automotive News)

Also today, Sen. Charles Grassley asked Senate Judiciary Committee Chairman Patrick Leahy to conduct hearings on legislation he introduced to reverse Chrysler’s 789 dealership closures and halt GM’s plans to shutter 1,350 stores, the publication said. Together, the statements by House Majority Leader Steny Hoyer and Grassley suggest that legislation that has been dormant for months could be resuscitated in response to delays in starting settlement talks, the Automotive News said.

The discussions were intended by lawmakers as an alternative to the measure that passed the House, but went nowhere in the Senate after the Obama administration said it raised constitutional issues, the paper said. Hoyer, D-Md., told reporters that he and other lawmakers were “working very hard on getting to a point where we can sit down to see whether or not there is a possibility of reaching accommodation between the parties.” (Automotive News)

The 143-page report from the Congressional Oversight Panel overseeing the $700 billion Troubled Asset Relief Program said the Treasury Department must take steps to ensure more transparency, the paper said. The report, which will now be submitted to Congress, is likely to add ammunition to attempts by some to force a timetable for a speedy government divestment of its equity stakes in the two automakers—and its stake in GMAC, the News said.

The panel, chaired by Harvard Law Professor Elizabeth Warren, said Chrysler is “highly unlikely” to repay $5.4 billion of its $15 billion in government loans and quotes the administration’s top auto adviser, Ron Bloom, as saying the government may recover little of the initial $19.4 billion loaned to GM of the $50 billion it has received, the story said. (The Detroit News)

“We know a lot more about the viability of our business today than when we purchased Old Carco’s assets in its bankruptcy proceedings several months ago,” John Bozzella, Senior Vice President, External Affairs and Public Policy, said. “While Chrysler Group still faces challenges, we are confident that the future viability of the company will not be threatened if we accept these claims.”

OldCarco filed for bankruptcy protection on April 30, 2009. Following many complex and lengthy hearings, the bankruptcy court approved the sale of substantially all of OldCarco’s assets to a newly formed company, Chrysler Group LLC. As part of the bankruptcy court-approved purchase, Chrysler Group had agreed to assume liability only for cars sold by Chrysler Group. As a result of today’s announcement, Chrysler Group’s approach is consistent with that taken by General Motors as part of its bankruptcy process.

“We want our customers to feel comfortable and confident buying, driving and enjoying one of our vehicles,” Bozzella said. “Chrysler Group vehicles meet or exceed all applicable federal safety standards and have excellent safety records.”

Q:  Is the decision not to have PAC permanent?
A:  There are no plans to establish a new PAC at Chrysler Group LLC at this time.

Q:  Which chapters of the United Way will receive contributions?
•        United Way of Howard County (Kokomo plants)        
•        United Way of Boone County & United Way of Rock River County    (Belvedere Assy)
•        United Way of Delaware (Newark Assy)
•        United Way of Greater St. Louis (St. Louis North and South Assy)
•        United Way of Greater Toledo (Toledo Assy and Toledo Machining)
•        United Way of Summit County (Twinsburg Stamping)
•        United Way of Kenosha County (Kenosha Engine)
•        Washtenaw United Way and Chelsea United Way (Chelsea Proving Grounds)
•        Monroe County United Way (GEMA)
•        United Way of Southeast Michigan (multiple facilities)

Q:  Can I still contribute to other PACs or political campaigns?
A:  Yes, personal contributions to other PACs or political campaigns are up to you. We encourage you to remain active in your civic involvement.

Q:  What will happen to our state PACs?
A:  Those will be closed down as well and the balance will part of your contribution to the United Way.

The Chrysler PAC was established to voluntarily pool our financial resources and contribute to candidates for state and federal offices who support Chrysler’s views on business and public policy issues. Chrysler Group LLC has decided not to continue the operation of the Chrysler PAC.  Employee contributions will not be collected in the next payroll cycle and all contributions made after Chrysler Group LLC became operational, on June 10th, will be refunded to employees.

Chrysler has been a long-time supporter of the United Way. There are many communities that have been heavily impacted by the financial crisis and resulting downturn in the auto industry. We intend to donate the remaining balance of $525,000 from the PAC to local chapters of the United Way so that we can help support the communities that supported our PAC.

The External Affairs and Public Policy office will continue to advocate for Chrysler on key issues and involve our employees and stake holders in grassroots efforts. We appreciate all the contributions that have been made to the PAC and your support of our efforts in the Washington office.