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Hard at work to finalise US auto bailout legislation
Facing massive job losses, the White House and congressional Democrats are working to provide about $15 billion (Dh202 billion) in loans to prevent Detroit's weakened auto industry from collapsing.
- AP
- Published: 23:53 December 6, 2008
Washington: Facing massive job losses, the White House and congressional Democrats are working to provide about $15 billion (Dh202 billion) in loans to prevent Detroit's weakened auto industry from collapsing.
After yielding to President George W. Bush on a key point, House Speaker Nancy Pelosi said the House of Representatives would consider legislation next week to provide "short-term and limited assistance" to the US auto industry while it undergoes "major restructuring".
"Congress will insist that any legislation include rigorous and ongoing oversight to guarantee that taxpayers are protected and that resources are directed to ensure the long-term viability and competitiveness" of the industry, Pelosi said in a statement. The Senate is also scheduled to be in session next week.
The legislation, which was being crafted this weekend, would act as a lifeline to General Motors Corp, Ford Motor Co and Chrysler LLC while meeting demands from many skeptical lawmakers that Congress refrain from writing a blank check for the beleaguered industry.
Several officials on both sides said a key breakthrough on the long-stalled bailout came when Pelosi bowed to Bush's demand that the aid come from a fund set aside for the production of environmentally friendlier cars. The California Democrat spoke to White House chief of staff Josh Bolten during the day to signal her change in position, they added.
Pelosi said the billions of dollars that had been set aside to modernise plants to develop the green cars would be repaid "within a matter of weeks". Democrats said her hope was to include the funds in an economic recovery bill that lawmakers are expected to prepare for President-elect Barack Obama's signature shortly after he takes office.
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Officials also said the legislation would include creation of a trustee or group of industry overseers to make sure the bailout funds were used by automakers for their intended purpose. The funds are designed to last until March, giving the incoming Obama administration and the new Congress time to consider the issue anew.
One senior Democratic aide said Pelosi was seeking a provision that would bar the automakers from using any of the funds to pursue a legal challenge to states seeking to implement tougher auto emission standards. The aide spoke on condition of anonymity.
Job losses
The discussions came hours after the government reported that employers slashed 533,000 jobs in November, the worst single month's job loss in 34 years. Bush warned that at least one of the Big Three automakers might become a casualty of the severe economic crisis. "I am concerned about the viability of the automobile companies," Bush said.
Top executives from the Detroit automakers spent two consecutive days on Capitol Hill pleading for $34 billion in loans to help it survive a severe economic downturn and steep drop in auto sales.
Chrysler CEO Bob Nardelli, GM chief executive Rick Wagoner and Ford CEO Alan Mulally drove to Washington this week with detailed plans describing how their companies would use loans to make their industry more competitive in the long run.
Painting a grim picture, GM and Chrysler said they needed a combined $15 billion to help them maintain their operations through early 2009. Ford wants access to a line of credit of up to $9 billion but only if market conditions deteriorate.
Nardelli said Friday that Chrysler, which was rescued by $1.5 billion in loan guarantees approved in 1979, would edge closer to bankruptcy if Congress failed to reach a compromise.
"For us, if we were denied the funds, it certainly would push us in that direction and possibly, even worse, to liquidation," Nardelli said.
In a statement later on Friday, the company said: "Chrysler LLC is encouraged by the discussions as it appears we are making progress. We will continue to work with Congress and the administration on this important issue to ensure the future viability of our company." Lawmakers had a more sympathetic outlook on the plight of the car companies but many stressed that any aid would require a commitment to restructuring the foundering companies.
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