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$15B deal is in works to rescue automakers

From left, Rick Wagoner of GM, Robert Nardelli of Chrysler and Alan Mulally of Ford testify Friday, seeking $38-billion in loans.

Associated Press

From left, Rick Wagoner of GM, Robert Nardelli of Chrysler and Alan Mulally of Ford testify Friday, seeking $38-billion in loans.

WASHINGTON — Stunned by the loss of 500,000 jobs, congressional Democrats and the White House neared agreement Friday on at least $15-billion in bailout loans to the beleaguered auto industry.

President Bush warned that at least one of the Big Three carmakers might not survive the current economic crisis.

A key breakthrough came when House Speaker Nancy Pelosi bowed to Bush's demand that the aid come from a fund set aside for the production of fuel-efficient cars. Pelosi agreed to use the money instead to provide immediate cash to General Motors and Chrysler.

Without government help, GM executives have said their company may not survive the month.

Pelosi is insisting, however, that money pulled from the loan program be "replenished in a matter of weeks so as not to delay that crucial initiative," she said in a statement. The White House has yet to agree to those terms, Democrats said, and talks were scheduled to resume today.

The developments unfolded as auto executives pleaded for a second day with lawmakers for as much as $38-billion in loans to help them survive.

Pelosi's office issued a statement saying legislation would come to a vote in the House next week. The Senate is also scheduled to be in session to consider steps to aid Detroit's Big Three.

"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 American automobile industry," Pelosi's statement said.

While congressional leaders have signed on to the broad outlines of the proposal, aides said there is no guarantee that a majority of lawmakers will climb aboard.

"There is great unhappiness among the rank and file," a Democratic leadership aide told the Washington Post. "We're hoping they're less unhappy now because the automakers have been more contrite."

Officials in both parties also said the legislation would include creation of a trustee or group of industry overseers to make sure the bailout funds are used by General Motors Corp., Ford Motor Co. and Chrysler LLC for their intended purpose. The funds are designed to last until March, giving the incoming Obama administration and the new Congress time to consider the issue anew.

One senior Democratic aide told the Associated Press that Pelosi was seeking a provision that would bar the automakers from using any of the funds to pursue a legal challenge to states seeking to implement tougher auto emission standards. The aide spoke on condition of anonymity because the legislation was not yet drafted.

Bush said, "I'm concerned about those who work for the automobile companies and their families. And likewise, I am concerned about taxpayer money being provided to those companies that may not survive."

There were also fresh calls during the day for the Federal Reserve to come to the rescue of the Big Three, possibly in the form of low-cost loans.

GM said Friday it will cut about 2,000 jobs, bringing the year's total to 11,000.

$15B deal is in works to rescue automakers 12/05/08 [Last modified: Thursday, November 4, 2010 10:58am]
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