WASHINGTON -- Congress and White House negotiators reached an agreement in principle Tuesday that reconciles their differences over terms for $15 billion in loans to rescue General Motors and Chrysler, Sen. Carl Levin, D-Mich., said in a statement.
Earlier Tuesday, the carmakers' bailout hopes had been dimmed by Federal Reserve Chairman Ben Bernanke's decision that the Fed won't fund loans. Bernanke informed Senate Majority Leader Harry Reid, R-Nev., in a Friday letter made public Tuesday.
The congressional bailout proposal, outlined Monday and being hammered out with the White House, would give automakers seven-year loans in return for warrants for stock, plus a list of conditions. GM and Chrysler have said they face bankruptcy filings if they don't receive loans. They're running out of cash because car sales have collapsed.
The strings attached to the loans have been at issue between the Bush administration and Democratic leaders in Congress.
A key area is the role and powers of a proposed "car czar," a government overseer to supervise company restructuring. Automakers taking the loans also would be banned from suing California and other states over individual greenhouse-gas rules stricter than federal rules. Automakers have argued that those are higher fuel-economy rules in disguise and that only the federal government legally can regulate fuel economy.
House Speaker Nancy Pelosi said on NBC's Today Tuesday that a car czar could be named this week if a loan bill passes. She suggested former Fed chairman Paul Volcker, President-elect Barack Obama's top adviser on steering the economy out of recession.
A skeptical Sen. Bob Corker, R-Tenn., said on CNN's The Situation Room that he still opposes bailout loans. He called for using the next three weeks to see if automakers' creditors would take equity stakes in exchange for cutting debt loads.
Equity would be valuable only if the companies survive and thrive. Corker also wants to see if the United Auto Workers union will make deeper concessions.
Underscoring automakers' troubles, GM offered up to $10,000 rebates on leftover 2008 SUVs. The amounts are "quite unusual," says Jesse Toprak, market analyst for Edmunds.com. And they could make it harder to sell '09 models, he added.
Contributing: Wire reports