WASHINGTON — Democratic leaders in Congress asked the Bush administration on Saturday to provide more aid to the struggling auto industry, which is bleeding cash and jobs.
House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700-billion bailout to include car companies.
"A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy, and the livelihood of the automobile sector's work force," they wrote. "The economic downturn and the crisis in our financial markets further imperiled our domestic automobile industry and its work force."
The administration did not offer direct comment on the request to broaden the $700-billion financial industry bailout so automakers could get a share. Treasury Department spokeswoman Brookly McLaughlin said the department is working on ways to most effectively use the remaining dollars in the rescue to strengthen the financial system and get lending moving again.
Automakers already want an additional $50-billion in loans from Congress to help them survive tough economic conditions and pay for health care obligations for retirees. The companies are seeking the loans as part of an economic aid plan that is now more likely to come together early next year rather than in a postelection session of Congress.
Top executives of General Motors, Ford, Chrysler LLC and the president of the United Auto Workers met with congressional leaders Thursday to discuss the loans. The money would be on top of the $25-billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.
"We left the meetings convinced that our nation's automobile industry — the heart of our manufacturing sector — and the jobs of tens of thousands of American workers are at risk," Pelosi, D-Calif., and Reid, D-Nev., said in their letter to Paulson.
If Congress approves more loans, they would come with strings attached. Potential protections include limits on executive compensation, awarding the government preferred stock in the companies and a suspension of dividend payments to investors.
President-elect Obama said Friday his transition team would explore policy options to help the auto industry. Obama's economic transition team includes allies of the auto industry.