White House gets bailout plan, but negotiations continue
Congressional Democrats sent the White House an emergency $15 billion auto bailout plan Monday, complete with provision of a "car czar" to oversee the industry's reinvention of itself. The Bush administration said there had been progress toward agreement but pressed further negotiations into the night.
The measure would rush bridge loans to Detroit's struggling Big Three but would also demand that the auto industry restructure itself in order to survive and would put an overseer chosen by President George W. Bush in charge of monitoring that effort, according to the draft obtained by The Associated Press.
At first blush, White House officials suggested privately that the draft plan might fall short of principles behind a broad agreement to give long-term financing only to viable companies. But a later statement from press secretary Dana Perino sounded relatively upbeat about the rescue legislation, which congressional leaders hope to approve in the next few days.
"We've made a lot of progress in recent days to develop legislation to help automakers restructure and achieve long-term viability," she said. "We'll continue to work with members on both sides of the aisle to achieve legislation that protects the good faith investment by taxpayers."
Bush himself said it was "hard to tell" if a deal was imminent because definite conditions had to be met. "These are important companies, but on the other hand, we just don't want to put good money after bad," he said in an interview with ABC's "Nightline."
Senate aides said they thought they were rounding up significant Republican support to ensure passage as early as Wednesday while still hammering out the final details.
The bailout bill that gives automakers seven years to repay the loans at a 5 percent interest rate. Automakers will have to get approval from a government administrator for any transaction of $25 million or more and must submit a detailed long-term restructuring plan by March 31, which must be approved by the White House's designee.
Automakers accepting loans are barred by law from having corporate airplanes.
The government will get stock warrants worth 20 percent of the value of the government loans.
They are also prohibited from taking part in lawsuits against states who are seeking to impose their own vehicle emissions standards.
Sen. Majority Leader Harry Reid, D-Nev., said Congress was committed to getting emergency aid to automakers, but said General Motors Corp., Ford Motor Co., Chrysler LLC were teetering on the brink largely "through their own ineptitude."
Still, he said "Congress is trying to save Detroit."
Sen. Kit Bond, R-Mo., a chief Republican ally of the automakers, said on the Senate floor that: "I share and understand the bailout fatigue" of many Americans. "Doing nothing for the auto industry means allowing them to go into bankruptcy."
House Speaker Nancy Pelosi, D-Calif., said negotiations were continuing with the White House, and lawmakers were hoping to create an auto industry that could thrive on its own -- an effort she said would require concessions from management, labor, creditors and others.
"We call this a barbershop. Everybody's getting a haircut," Pelosi said.
Earlier Monday, the White House and a top Democratic lawmaker said they were likely to strike a deal quickly on the multibillion-dollar bailout, which places strict restrictions on the automakers while they're receiving the loans and mandates that the government overseer keep close tabs on their efforts to restructure.
The emergency loans would be drawn from an existing program meant to help the automakers build fuel-efficient vehicles.
Among the requirements included the draft proposal is one that the carmakers getting federal help get rid of their corporate jets -- which became a potent symbol of the industry's ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government aid.
The proposal also would give the overseer -- a kind of "car czar" -- say-so over any major business decisions by the automakers while they're taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more and any "material change" in their financial condition.
Under the plan, the carmakers could get emergency loans right away. Then the overseer would write guidelines, due on the first of the year, for restructuring the Big Three automakers.
In testimony before Congress last week, General Motors Corp. and Chrysler LLC, which have said they are weeks from collapse, made it clear they would need a total of $14 billion to $15 billion to survive through early 2009. Ford Motor Co. has said it has enough money to stay afloat unless one of the other Big Three goes under or the economy deteriorates more sharply.
While the measure would put an administration official selected by Bush in charge of setting terms for restructuring, the decision about whether the terms were being met would not be made until President-elect Barack Obama had been sworn in. Congressional Democrats and the White House were working to find a broadly supported candidate who could span the two administrations.
Congressional officials said Kenneth Feinberg, the lawyer who oversaw the federal Sept. 11 victims' compensation fund, was under consideration for the position.
Asked if a deal could be struck for a vote as early as Monday, White House spokeswoman Perino said, "I think it's very likely." That was before the Democrats sent their draft.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said that he, too, expected a deal by the end of the day and enactment by week's end.
In the latest gauge of public opinion, people were split about evenly over providing federal money to keep the car companies functioning.
Forty-five percent approved and 44 percent were opposed, according to a CBS News poll released Monday. Nearly six in 10 Democrats favored the aid, while nearly the same share of Republicans opposed it.
About seven in 10 said the government should have a say in managing the companies if taxpayers provide assistance, and nearly as many said requiring more alternative fuel vehicles should be a condition of such aid. Fifty-six percent blamed management for the companies' problems, double the number who blamed uncontrollable economic problems.
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Washington must be a giant ass magnet because thats all that ends up there.
They give the finance industry 700 billion to help out their bro's in the finance business that technically neither manufactures nor produces anything but paperwork for profit but when an group of actual manufacturers that produce a product and provide employment for untold masses directly and indirectly asks for a bridge loan to get by...congress gets out the bdsm gear and demands "pony-time" from the executives..frankly demeaning them publicly like stern headmasters.
What The F#@* ?
These asswipes DEMAND performance and plans of actions from the auto industry but can't even balance the damn budget...HELLO? CONGRESS?...your 10 trillion in debt you f-wads!
If ANYONE deserves a stern dressing down if not flat out tried for ineptness it's congress.
Is this dog and pony show so we will forget you approved us into two wars, approved the economy into debt by deregulation, approved of flawed trade international aggreements, approved of laws that favored corporations and limited the power of the individual?
Is that why you pout and finger point and yell and glower with such determination?...that we might forget that it was you that brought us to this.
ARGH!
Welcome To Detroit
