The CEOs of Ford, GM and Chrysler admitted to past mistakes in an effort to convince Congress to grant them a 34-billion-dollar taxpayer bailout. President Bush said they must prove their long-term viability before they see any cash.
AFP - The fate of the Big Three US automakers remained uncertain Friday after contrite chief executives asked skeptical senators to deliver a 34-billion-dollar bailout for the ailing industry.
Following a near-six-hour grilling of the car giant bosses, senior Democratic Senator Chris Dodd said he would work to broker an eleventh-hour compromise but it was unclear whether a majority of lawmakers were ready to back a rescue.
President George W. Bush said Chrysler, General Motors and Ford must prove their long-term viability to justify government cash, reflecting the tense political sparring over the firms' fate.
Backers of the bailout warn that the failure of one or more of the top auto manufacturers could severely batter the already reeling US economy and wipe out millions of jobs.
"Nothing concentrates the mind like a death sentence," Dodd said, but cautioned he was not a "miracle worker" and said Congress was not about to simply write a no-strings-attached check for 34 billion dollars.
"I don’t want to raise expectations that that is going to be easy at all given the climate in the country," said Dodd. "That’s a tall order."
Bush's intervention cast further doubt on the rescue plan.
"No matter how important the autos are to our economy, we don't want to put good money after bad," Bush said.
"In other words, we want to make sure that the plan they develop is one that ensures their long-term viability for the sake of the taxpayer."
Democrats want the White House to tap an already approved 700-billion-dollar finance industry bailout to rescue the auto firms.
But the Bush administration insists the money should come at least partially from diverting 25 billion dollars in loans to the industry which are designed to spur development of fuel-efficient vehicles.
In a sign a possible deal was slipping away, Democratic House speaker Nancy Pelosi and Senate Majority leader Harry Reid wrote to the president on Thursday asking him to change his mind, and said they may call Congress back from a recess next week to consider rescue plans.
Some lawmakers say the cash-strapped firms should consider bankruptcy protection while they restructure, but executives argued such a move would kill consumer confidence.
Members from both parties were reluctant to endorse a bailout for different reasons, with Democrats frustrated with the industry's lackluster record on fuel-efficiency and conservatives worried about wasting taxpayers' money.
The Big Three bosses must repeat their ordeal for the House Financial Service committee on Friday.
Earlier, the car bosses put on a show of humility at the Senate Banking Committee hearing, after being sent back to Detroit to retool their restructuring plans two weeks ago.
They pledged to cut jobs and costs, sell off subsidiaries, shelve unprofitable models and develop cars which run on new-generation fuels, and on Thursday offered to submit their restructuring to a federal oversight board.
"We're here today because we made mistakes, and we're here because forces beyond our control have pushed us to the brink," GM chairman and CEO Rick Wagoner told the Senate committee.
Ford CEO Alan Mulally added: "Since the last hearing, I have thought a great deal about the concerns you expressed. I want you to know I heard your message loud and clear."
United Auto Workers chief Ron Gettelfinger warned time was short.
"I believe that we could lose GM by the end of the month," he said.
But Moody's Economy.com chief economist Mark Zandi testified the true cost of a bailout would be much higher than 34 billion dollars, estimating the eventual outlay at 75 to 125 billion dollars.
The committee's top Republican, Senator Richard Shelby, stuck to his opposition to a bailout.
"A lot of people believe sincerely that the restructuring plans that each of your companies has provided us are not a serious set of plans," he said.
Wagoner requested a second four-billion-dollar loan by January in addition to an already requested immediate four-billion-dollar rescue payment.
Both payments would come from GM's request for 12 billion dollars in short-term loans and a six-billion-dollar line of credit requested by the firm.
Mulally argued Ford's restructuring program was already working, but asked for a nine-billion-dollar line of credit in case the economy worsens.
Chrysler said it needed seven billion dollars by December 31.
Date created : 2008-12-04