White House, legislators say auto bailout deal looks close
— -- Congressional leaders moved closer to an agreement on an interim aid package of at least $15 billion in loans for General Motors and Chrysler that could be considered by legislators as early as Tuesday. Several key issues remain unresolved, however.
The amount is far less than the $34 billion in loans and lines of credit sought by Detroit automakers, but could be a temporary solution to hold over GM GM and Chrysler until the new administration takes office. Ford F, in the best financial shape and asking only for a line of credit, has said it does not need immediate loans.
"It sounds like we have agreement on those basic principles that would be required for a bill that the president could sign," White House press secretary Dana Perino told reporters Monday.
Asked if the deal could happen as early as Monday, Perino said, "I think it's very likely." Yet, she said that if Congress expects to hold an initial vote on Tuesday, "it seems pretty soon if we haven't seen the language yet."
Among the issues to be resolved is the future of auto industry executives.
Sen. Chris Dodd, D-Conn., chairman of the Banking Committee, said Monday that "it's not my job to hire and fire, but what I suggest is, you need to have new teams in place here ... if you're going to convince the American public" that the financial relief plan is necessary and justified.
Dodd has said General Motors' chief executive Rick Wagoner, for one, "has to move on" as part of a government-run restructuring.
He also said on ABC's "Good Morning America" Monday that figures showing more than a half-million people lost their jobs in November amounts to a "game-changer" in the debate over an aid package.
UAW President Ron Gettelfinger, appearing on NBC's "Today" show, said his union is ready to go back to the bargaining table to help the auto companies, but he also said that workers should not be made "scapegoats" for their problems.
Sen. Carl Levin, D-Mich., told Fox News Sunday that he believes a deal will be announced shortly. Still, it's uncertain whether a compromise will pass muster with the full House and Senate.
"That's a much more complicated question, as to whether the votes are there," Levin said. "What I'm confident of is the bill will be introduced."
The bailout plan now under discussion could include a Cabinet-level oversight board and a provision to withdraw the money if the overseers decide the companies are failing to take steps to overhaul themselves.
The plan would draw the emergency aid from an existing loan program meant to help the automakers build fuel-efficient vehicles. The size of the package isn't final, but it is expected to be about $15 billion, several congressional aides said.
It would create a board composed of Cabinet secretaries from Treasury, Energy, Labor, Commerce and Transportation plus the Environmental Protection Agency administrator to oversee a broad auto industry restructuring. A congressional aide outlined the emerging measure on condition of anonymity because it is not yet completed.
In return for the money, carmakers would have to agree to terms similar to those placed on banks that receive funds under the $700 billion Wall Street bailout: to limit their top executives' pay packages, stop paying dividends, give the government a chunk of future gains and guarantee that taxpayers would be reimbursed before any other shareholders, the aide said.
The bill under discussion would place the special investigator overseeing the bank rescue in charge of keeping tabs on the auto bailout.
Criticized for staying on the sidelines until now, President-elect Barack Obama voiced support Sunday for the bailout legislation being drafted in Congress. He accused car industry executives of a persistent "head-in-the sand approach" to long-festering problems.
In an appearance on NBC's "Meet the Press," Obama said Congress was doing "the exact right thing" in drafting legislation that "holds the auto industry's feet to the fire" at the same time it tries to prevent its demise. He also said he did not believe bankruptcy would work for them.
GM spokesman Steve Harris said the company appreciates Dodd's support for the loans, but added, "GM employees, dealers, suppliers and the GM board of directors feel strongly that Rick is the right guy to lead GM through this incredibly difficult and challenging time."
The economic and credit crises in the housing and financial services industries have also hit the automakers, as well as decimated sales demand. General Motors and Chrysler say they each need $4 billion by the end of the month or they could run out of money. They have asked for up to $18 billion and $7 billion, respectively, to get through 2009. Ford Motor is in a better cash position, but says it needs an $9 billion line of credit to tap in case one of the other automakers fails.
Also on the table is a demand by Democrats that companies getting loans be banned from suing states that want to set emissions standards stricter than U.S. rules. The issue came up in hearings Friday, and none of the automakers would vow not to sue states over emissions standards that differ from federal standards in exchange for loans.
Obama said on NBC's Meet the Press that he would support helping the companies, as long as it came with conditions to "keep the automakers' feet to the fire in making the changes that are necessary" for long-term survival.
Contributing: Wire reports