Congress leaders agree on auto rescue plan
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Congressional leaders struck a deal Wednesday on a 15-billion-dollar bailout plan for the cash-strapped auto sector. The House of Representatives is expected to vote on the bill straight away.
Congressional leaders struck a deal on a bill to disburse 15 billion dollars to bail out the cash-strapped auto sector which is to be put to a House of Representatives vote as soon as Wednesday.
In the most far-reaching intervention in US industry in years, the tentative deal calls for emergency government loans to the car companies within days to be overseen by a "car czar" appointed by President George W. Bush.
In return, automakers by March 31 would have to cut costs, settle debts and make other changes to show a path to viability or face possible bankruptcy.
The government could choose to revoke the loans if the companies fail to make progress, or could refuse further assistance after March 31 if the Big Three have no promising survival plan, officials said.
Many of Bush's fellow Republicans in Congress were reluctant to back the bailout, with opposition running strong in the Senate where Democrats have a narrow majority.
The proposed short-term loans of 15 billion dollars (11.6 billion euros) are meant to sustain the car giants through March, allowing president-elect Barack Obama time to address their crisis after he takes office on January 20.
Obama has called a collapse of the auto industry "unacceptable," but said Sunday he wanted a supervisory process that would hold the companies' "feet to the fire."
GM and Chrysler are first in line, after warning they are fast running out of cash. Ford, though equally hampered by slumping sales, says it faces no immediate liquidity crisis but wants a nine-billion-dollar line of credit.
While the Democratic-led Congress was ready to extend a larger amount of aid, the Bush administration has balked at giving any more than 15 billion dollars and insists -- like Obama -- that the automakers must retool for the long haul.
The auto giants had initially asked for more than twice as much -- 34 billion dollars -- to stave off a "catastrophic collapse."
House of Representatives Speaker Nancy Pelosi said the automakers must be "preserved" as it was "essential to our national security that we have a strong industrial and manufacturing base."
But government help must not amount to "corporate welfare," she told reporters, mentioning former Federal Reserve chairman Paul Volcker as a possible presidential czar to supervise the companies' restructuring.
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