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Congress Heading Toward ‘Big Three’ Rescue

Posted by tothewire on December 6, 2008

Deal Could Give Automakers Up to $17B in Short-Term Loans

1218049073774Congressional leaders are close to a deal to provide a $15-17 billion rescue for the Big Three automakers — about half what industry leaders claimed was needed to save the companies.

The deal, which Congressional leaders believe will be supported by the White House, would provide a series of short-term loans to General Motors, Ford and Chrysler to help keep the companies afloat until March.

Though details are still being negotiated, a vote on the bill is expected next week.

The once-stalled negotiations cleared a major hurdle Friday when House Speaker Nancy Pelosi, D-Calif, yielded to President George W. Bush’s instistence that the money be drawn from a fund for fuel-efficient technology.

“That’s like having a starving man before you and then arguing should you take the money to feed him out of your right pocket or left pocket,” Rep. Paul Kanjorski told ABC News. “Who the hell cares?”

According to White House press secretary Dana Perino, however, that condition was essential to an agreement as were taxpayer protections.

“Taxpayers should not be asked to finance assistance for automakers without a strong likelihood that they will be paid back,” Perino said in a statement today.

In a statement on Friday, Pelosi said next week the House would consider providing “short-term and limited assistance” to the 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, the statement said.

When the leaders of GM, Ford and Chrysler appeared on Capitol Hill to plead for government assistance, they requested $34 billion — $18 billion for GM, $9 billion for Ford and $7 billion for Chrysler — and met with some harsh criticism.

“Unless the labor cost of the Big Three become more competitive, $34 billion, $44 billion, $54 billion — name your number — will not solve the problem,” Rep. Jeb Hensarling, R-Texas said during the two-day Congressional hearing.

However, according to some experts, the collapse of even one of the Big Three could have vast repercussions across the nation.

congress autoBipartisan group works to revive auto bailout

A bipartisan group of auto-state senators reached a last-ditch compromise Thursday to throw Detroit’s Big Three a government lifeline worth billions, but the plan faces an uphill battle in a reluctant Senate.

(AP Graphics)

“If GM went into bankruptcy, they’d take Chrysler and Ford with them,” Mark Zandi, chief economist and cofounder of Moody’s Economy.com, told “Good Morning America.” If that happened, unemployment could easily jump to 10 percent, Zandi said.

GM Chief Operating Officer Fritz Henderson said as much last week during his plead for assistance.

“There isn’t a Plan B … the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that would have severe, long-term consequences to the U.S. economy,” Henderson said.

At a press conference last week, Pelosi said bankruptcy was “not an option”

Despite Congressional leaders’ optimism that the bill have enough support to pass next week, whether it would be enough to aid the failing industry remains to be seen.

“We are looking to make sure that we’re doing everything we can to take care of the auto industry, if in fact it’s viable that it is it’s not just throw them a rope that doesn’t get them to shore,” said Reid after a round table discussion on renewable energy in Washington.

Keith Brown, president of a local United Auto Workers in Detriot and 16-year Ford employee, is watching and waiting.

“I’m cautiously optimistic that the Congress and the White House are working in a bipartisan manner to help the Big Three,” Brown told “Good Morning America.” “But it’s too early to speculate because the details are sketchy right now.”


Jonathan Karl and The Associated Press contributed to this report.



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