Former Fed Chairman Volcker Favored as Car Czar

Former Fed Chairman Volcker Favored as Car Czar

Former Federal Reserve Chairman Paul Volcker looks to have the inside track for the newly created post of car czar, if the federal loans for Detroit automakers is approved by the Senate today -- an approval that is in doubt.

Nevertheless, the Bush White House reportedly is coordinating with the incoming Obama administration in choosing a new "car czar" to oversee the auto company restructurings required under the loan legislation passed by the House Wednesday night. Volcker appears to be acceptable to both sides.

The 81-year-old Volcker has been an important economic adviser to President-elect Obama and on November 26 was named head of Obama's Economic Recovery Advisory Board. Volcker has the added benefit of automotive bailout experience -- he was Federal Reserve Board chairman and a principal government participant in the Chrysler bailout. He and the oversight board played a key role in winning concessions from the United Auto Workers union and from Chrysler's banks..

A Democrat, Volcker was appointed Fed chairman in August 1979 by President Jimmy Carter and reappointed in 1983 by President Ronald Reagan. He is widely credited with ending the U.S. economic issues during the two presidencies.

The car czar is seen as functioning like a bankruptcy judge, restructuring the auto companies by pulling together all constitutencies including executives, unions, retirees, suppliers and creditors to share in the sacrifice. Under the proposed legislation, the car czar would be able to use the threat of actual bankruptcy as one of several weapons to force the parties into reaching a deal. The companies' progress would be evaluated after 45 days, and then they would be required to submit their own progress reports by March 31 to the car czar.

Other names that have been mentioned as possibilities for the post. They include:

 
Kenneth Feinberg, who oversaw the September 11 victims' fund;

Roger Penske, Detroit businessman who runs numerous auto-related businesses including Mercedes-Benz's smart distribution, a large dealership group, race car teams, trucking business and auto repair facilities;

Lee Iacocca, who was Chrysler chairman and CEO during its successful government bailout;

Mitt Romney, who most recently was a presidential candidate and is rumored to be planning another run at the nation's top job in 2012. Romney was Massachusetts governor and overseer of the Salt Lake City Winter Olympics. He is son of the former American Motors chairman and Michigan governor George Romney. Of late, Romney has advocated letting Detroit automakers go bankrupt after wooing the industry during his presidential run.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.