The White House and Congress said on Tuesday they had agreed on the outline of a 15-billion-dollar bailout plan for the US auto industry but added that negotiations on the content of the future bill were still going on.
REUTERS - The White House and congressional Democrats on Tuesday night reached an agreement in principle on a $15 billion proposal for bailing out U.S. automakers, officials said.
A Bush administration official and a Democratic leadership aide said the accord covered key points but final issues needed to resolved and put in writing.
Democrats have arranged to have the House of Representatives vote on a bill as early as Wednesday and send it to the Senate for consideration.
President George W. Bush and President-elect Barack Obama were both urged by a key lawmaker to help rally support by Democrats and Republicans for the pending measure.
"Bipartisan hard work has paid off," said Democratic Sen. Carl Levin of Michigan whose home state headquarters General Motors Corp Ford Motor Co and Chrysler LLC.
"I understand an agreement has been reached," Levin said in a statement.
The bailout is designed to allow GM and Chrysler to avert threatened bankruptcy through March with short-term loans. Ford Motor Co is not requesting immediate help but would like a line of credit in case its finances worsen.
The parties that negotiated the tentative deal agreed last week that the money would come from an Energy Department fund established in September to help Detroit make more fuel-efficient cars.
'Car czar' to monitor
The administration official said the negotiators satisfied the key White House concern in the talks that companies receiving aid obtain the necessary concessions and make other changes to prove they can survive and compete.
In addition to providing $15 billion in loans, the Democratic proposal would force automakers to answer to a presidentially appointed trustee -- or "car czar" -- and make the government their biggest shareholder.
The negotiators have resolved questions about the overseer, which will have powers to shape a restructuring of the companies, withholding further loans if progress toward a turnaround stalled.
A key provision would permit the czar to recommend a bankruptcy restructuring if companies borrowing money fail to obtain the necessary concessions. Some Republicans wanted some sort of bankruptcy option included as an incentive for labor and other stakeholders to agree on givebacks.
The administration still opposes a Democratic bid to force automakers to drop lawsuits against California and other states seeking to cut auto emissions and other greenhouse gases. The administration official said it was his expectation the bill will not succeed unless that provision is struck.
Democrats control Congress and were expected to be able to muscle a bill through the House. But it was unclear if Republicans could stop a measure in the Senate with a procedural roadblock that requires 60 votes to clear.
"Ball is in the Senate Republicans' court," said Jim Manley, a spokesman for Senate Majority Leader Harry Reid, a Nevada Democrat. "There is no word yet whether they will give us consent."
A spokesman for Senate Minority Leader Mitch McConnell, a Kentucky Republican, said he would decline comment until he saw the bill.
An auto bailout has evoked competing emotions in Congress.
Lawmakers fear if automakers collapse, it would deepen the U.S. recession. But many say market forces, not a government saddled with a record deficit, should determine their fate.
There also is reluctance to provide another federal rescue in the wake of the voter backlash against Congress for its passage of a $700 billion bailout for Wall Street in October.
At the same time, many argue that if Congress provided relief for millionaires in the U.S. financial industry, it should also help blue-collar autoworkers facing unemployment.
Automakers have had powerful friends in Congress over the years who have shielded them from adopting costly and stricter fuel efficiency standards.
But they also had critics who complained automakers were led by poor executives who stuck to producing gas-guzzling vehicles unable to compete with smaller, foreign-made ones.
A poll by CBS News conducted last week found Americans split on whether taxpayer funds should help automakers.
But more than 65 percent said in exchange for any aid, the government should have a say in the automakers' management and require more fuel-efficient cars.
The rescue plan would grant the government the right to acquire preferred shares, or the economic equivalent, equal to 20 percent of the amount loaned.
At GM, that could mean the government would end up with half of the equity in the top U.S. automaker before factoring in any new shares the company would issue as part of an effort to cut debt by $30 billion, analysts said.
Shares of GM and Ford rose more than 20 percent on Monday on prospects for a rescue deal but gave back some of those gains on Tuesday as they dropped about 4 1/2 percent.
Date created : 2008-12-10