Vote on carmaker aid could take place today

Auto dealership employees, members of the United Auto Workers and mechanics rally Monday at a dealership in New York City in support of a government bailout for U.S. carmakers. A deal could face opposition from Republicans in Congress.

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Auto dealership employees, members of the United Auto Workers and mechanics rally Monday at a dealership in New York City in support of a government bailout for U.S. carmakers. A deal could face opposition from Republicans in Congress.

WASHINGTON — Congressional aides and a senior administration official say the White House and congressional Democrats have reached an agreement in principle to speed $15-billion in government loans to struggling U.S. automakers.

The plan could see a vote as early as today. It creates a government "car czar," to be named by President Bush, to oversee the bailout billions and an auto industry restructuring. The czar would have to yank back the federal money if carmakers didn't do enough to reinvent themselves.

The measure is not final and could still face obstacles from congressional Republicans, who have not approved it. The officials spoke on condition of anonymity because they were not authorized to announce the developments.

The unresolved issues included the extent of the authority to be given to the new auto czar, according to congressional aides, although it was clear the companies could be forced to return any aid if they did not use the money to ensure their long-term survival.

Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, privately briefed House Democrats on the emerging deal Tuesday and told reporters afterward that he expected to seal it by day's end.

"The room was pretty supportive" of the developing bill, Frank said.

Senate Majority Leader Harry Reid said he hoped for a vote by today, but would keep the Senate in session through the weekend if necessary to complete work on the bailout.

The core of the bill — and its aim — was not in dispute. It would provide emergency loans to two of Detroit's Big Three auto makers — Ford Motor Co. has said it doesn't need an immediate cash transfusion — and create a presidentially named car czar. The federal overseer would supervise a broad industry restructuring and would be empowered to yank the money back if the carmakers weren't doing enough to ensure their own survival.

The fast-paced developments come amid an environment of general economic instability, the Congress and the presidency both in transition, a ricocheting Wall Street and the Federal Reserve Board, Treasury and other agencies fighting to steady the reeling financial industry.

A final deal hinged on only a couple of outstanding issues, Reid, D-Nev., said.

Still, the few differences remaining were significant. The White House and congressional Republicans were demanding tougher consequences for carmakers that couldn't prove to the government they were viable, including a requirement — rather than an option — for them to be cut off from federal aid.

Republicans also were demanding that Democrats scrap a requirement that car companies getting loans drop their lawsuits against states that impose tougher emissions standards than the federal rules.

Bernanke: Auto aid best left

to Congress

Federal Reserve Chairman Ben Bernanke suggested Tuesday that he would be reluctant to use the central bank's emergency lending program to help struggling U.S. auto companies.

In a letter to Senate Banking Committee Chairman Chris Dodd, D-Conn., Bernanke said any decision about providing financial aid to Detroit is best left to Congress.

A key consideration in letting an auto company draw loans from the Fed is whether the company has sufficient collateral to repay the loan. "It is unclear whether the auto manufacturers have unencumbered assets of sufficient amount and quality to meet this requirement," Bernanke wrote.

And, even if they did, lending to an auto company would be a "marked departure" in the use of the Fed's emergency program, which is aimed at promoting financial stability, the Fed chief wrote.

Associated Press

Vote on carmaker aid could take place today 12/09/08 [Last modified: Monday, November 7, 2011 4:46pm]

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