Kuwait Times

Published Date: December 07, 2008

WASHINGTON: US congressional Democratic leaders yesterday lined up votes for a bailout for teetering Big Three automakers, after two days of testimony from industry bosses desperate for a government rescue.

Shock Labor Department figures showing the loss of 533,000 US jobs in November seemed to force the hand of congressional leaders locked in a showdown with the White House over how to finance a rescue plan. Chrysler, Ford and General Motors chiefs had lobbied for a $34 billion bailout in Capitol Hill testimony which saw some skeptical lawmakers fling charges that the iconic firms were plagued by mismanagement.

I expect that legislation will be brought up for a vote in the House next week," House of Representatives speaker Nancy Pelosi said in a statement. Senate Majority leader Harry Reid said he hoped his chamber would also vote on a bailout in a lame duck session, and pressured Republicans to help push the rescue bill through.

We will need support and cooperation from Republicans to determine when that vote happens and whether it will succeed," Reid said. "This week's hearings have made clear that we cannot let these companies fail.

The announcement of congressional votes came after President George W Bush demanded Congress act on the bailout. The New York Times reported yesterday that Democrats were likely to come up with $25 billion in federally subsidized loans to help the automobile companies, but the money will be earmarked for developing fuel-efficient cars.

Citing unnamed congressional aides, the newspaper said the deal on assistance to automakers could also clear the way for Treasury Secretary Henry Paulson to request the remaining $350 billion of the $700 billion financial industry bailout fund.

Earlier, House Financial Services committee chairman Barney Frank said in a hearing involving the auto bosses that Congress invited "disaster" if it did not act.

Ford CEO Alan Mulally was asked whether the failure of one of the Big Three could result in the demise of its competitors. "If one of us goes in, it has the potential to take all of us in," he said.

GM boss Rick Wagoner and Chrysler chief Robert Nardelli also renewed pleas for help before the House panel, following six hours of similar testimony to a Senate hearing on Thursday.

Democrats had called on the White House to tap an already approved $700 billion finance industry bailout known as the Troubled Assets Relief Program (TARP) to rescue the firms.

But the Bush administration insists the money should come from diverting $25 billion in loans to the industry designed to spur development of fuel-efficient vehicles. After Thursday's Senate Banking committee hearing Democratic Senator Chris Dodd had said he would work to broker an 11th-hour deal.

Nothing concentrates the mind like a death sentence," Dodd said. Some lawmakers say the cash-strapped firms should use bankruptcy protection to restructure, but executives say such a move would kill consumer confidence in their products.

The bosses appeared at acrimonious hearings two weeks ago but were sent back to Detroit to retool their restructuring programs. The new plans include cuts in jobs and costs, the sale of subsidiaries, and the demise of unprofitable models.

They also pledged to develop cars that run on new-generation fuels, and to submit their restructuring to a federal oversight board. United Auto Workers chief Ron Gettelfinger warned on Thursday that time was short. "I believe that we could lose GM by the end of the month," he said.

GM Thursday requested a second four-billion-dollar loan by January in addition to an already requested immediate four-billion-dollar rescue payment.

The firm wants a total of $12 billion in short-term loans and a six-billion-dollar line of credit. Ford wants a nine-billion-dollar line of credit and Chrysler says it needs seven billion dollars by December 31. - AFP