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Senate to debate rescue for auto industry

WASHINGTON — The battle for the future of U.S. automakers arrives in Congress at noon Monday, when the Senate is to take up a rescue plan whose prospects and particulars remained clouded Friday.

While key Democrats vowed to push ahead, Senate Republicans questioned the use of taxpayer money to bail out Detroit, while the White House hardened its opposition to saving automakers with money from the $700-billion financial industry bailout.

Much of the bill was still in flux, including the amount. The automakers have said they need $25-billion to survive a crippling economic downturn. A smaller package will likely be designed to get them through to early next year, when an Obama administration and the new Congress would tackle a long-term fix.

President Bush said Congress should help automakers by passing legislation to let automakers quickly tap a $25-billion pool of low-interest loans intended to help them retool factories to meet new fuel-economy standards. Those loans, approved in 2007, were to be doled out over the next few years.

General Motors, Ford and Chrysler are seeking an emergency infusion of cash. GM is spending down its operating cash at a rate of $3.1-million an hour and has warned it might not survive through year's end without a government lifeline.

Defying Bush, Senate Majority Leader Harry Reid, D-Nev., said he would hold a vote next week on a bailout. The vote could occur as early as Wednesday.

Bailout watchdog: President Bush nominated Assistant U.S. Attorney Neil Barofsky to become the Treasury Department's special inspector general in charge of auditing and investigating how the federal government spends bailout money. The pick requires Senate confirmation. Barofsky, 38, most recently led the prosecution of top executives at Refco Inc., one of the world's largest commodities brokerages, which collapsed in an accounting scandal in 2005.

Foreclosure help: Publicly breaking with the Bush administration's official stance, the Federal Deposit Insurance Corp. proposed Friday to use $24-billion in government funding to help 1.5-million American households avoid foreclosure. But testifying on Capitol Hill, Neel Kashkari, the Treasury Department's assistant secretary for financial stability, opposed the idea and said it went beyond the intentions of the $700-billion rescue plan.

Freddie Mac: After posting a massive $25.3-billion quarterly loss Friday, the struggling mortgage giant is asking for an initial injection of $13.8-billion from the $200-billion promised by the Treasury Department to keep it and sibling company Fannie Mae afloat after the two were seized by federal regulators in September. Freddie Mac said it expects to receive the money by Nov. 29.

Banks' requests: At least 110 banks have requested more than $170-billion from the Treasury Department's rescue fund, and many more were expected to have submitted applications before Friday's deadline. The requests would come from the $250-billion the Treasury set aside from the $700-billion fund to purchase stock in banks.

Two competing economic views at summit

The heads of 20 nations, which collectively create 90 percent of the world's wealth, will follow up a White House dinner Friday with a meeting today to discuss ways to keep the credit crunch from becoming a worldwide economic catastrophe.

President Bush, in his radio address today, will speak of the financial crisis and the summit, which brings together the so-called Group of 20 industrial and emerging economies.

The leaders face the challenge of reconciling two competing economic views. While the United States and Canada remain supporters of free markets, Europeans led by French President Nicolas Sarkozy demand greater government control of financial markets.

The two sides in the debate will try to make their cases before the heads of state, not only from North America, Europe and Russia, but also from China, India, Brazil, Saudi Arabia, South Africa and other emerging nations.

Times wires

Senate to debate rescue for auto industry 11/14/08 [Last modified: Monday, November 7, 2011 4:44pm]

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