House leaders propose federal stake in automakers

— -- A key House Democrat is writing legislation that would send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are pressing for quick passage of an auto bailout during a postelection session of Congress that begins Tuesday.

The legislation being drafted by Democratic Rep. Barney Frank, chairman of the Financial Services Committee, would dip into the $700 billion Wall Street rescue money approved by Congress last month for the auto aid. President Bush is cool to that idea, although the White House says he is open to helping the troubled industry.

Treasury Secretary Henry Paulson called autos a "critical industry" Wednesday but said a $700 billion financial rescue program wasn't designed for them. The White House said it is open to new ideas.

"We are going to work with Congress, we are open to their ideas," White House spokeswoman Dana Perino said. "If they are going to amend or accelerate those funds we will certainly look into their ideas and work with them."

On Tuesday, Speaker Nancy Pelosi said the House of Representatives may reconvene for a lame-duck session to work on legislation that would provide financial assistance to the automakers.

Paulson said Congress could try to make funding more available to the auto industry as part of a $25 billion loan program approved in September to develop fuel-efficient vehicles. But, he cautioned that "any solution has got to be leading to long-term viability" for auto companies.

Pelosi, in her statement, said, "In order to prevent the failure of one or more of the major American automobile manufacturers, which would have a devastating impact on our economy, particularly on the men and women who work in that industry, Congress and the Bush administration must take immediate action."

The Senate also plans to address needs in the auto industry, Senate Majority Leader Harry Reid said in a statement. The Senate was already scheduled to be in session.