Bid to Save GM, Chrysler Loans Dies in Senate

Dec. 12, 2008— -- U.S. Senators killed an effort to rescue Detroit automakers Thursday night after a last-ditch attempt to renegotiate the deal died.

The package was doomed on a 52-35 procedural vote, well short of the 60 votes needed to bring the bill to the floor for passage.

"To all those within the sound of my voice: We have tried very, very hard to legislate for the automobile industry," Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor before the vote. "I am very sorry we have not been able to find a conclusion."

Reid's comments came after a night of negotiations involving Sen. Bob Corker, R-Tenn., who wanted to revise the existing rescue deal to force pay cuts on union workers by demanding that General Motors and Chrysler pay back $14 billion in proposed government loans if they failed to slash labor costs a specified amount by March 31.

Corker met with fellow Republicans Thursday evening after talks with Democrats, and soon afterward, Reid made his announcement on the Senate floor.

"I dread looking at Wall Street tomorrow," Reid said. "It's not going to be a pleasant sight."

The White House quickly released a statement of regret after the failed Senate vote.

"It's disappointing that Congress failed to act tonight," deputy spokesman Tony Fratto said. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable. We will evaluate our options in light of the breakdown in Congress."

GM issued a statement expressing disappointment. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis."

Chrysler also released a statement saying it would: "continue to pursue a workable solution to help ensure the future viability of the company."

In the end, Reid was among the 35 voting against the Senate's shell bill -- but only for procedural reasons, officials said. After the 11:09 p.m. ET vote, he urged the White House to use the part of a $700 billion economic rescue package already approved by Congress to help keep the auto industry afloat.

Democrats blamed Republicans for the bill's failure, but Senate Republican Leader Mitch McConnell, R-Ky., suggested many Republicans genuinely couldn't stomach the terms of the deal.

"The administration negotiated in good faith with the Democratic majority a proposal that was simply unacceptable to the vast majority of our side because we thought it, frankly, wouldn't work," McConnell said.