Democrats near deal on bailout loans for US automakers
AFP - Sunday, December 7
WASHINGTON (AFP) - - Leaders in the US Congress and White House officials on Saturday reached the outlines of an agreement to loan billions of dollars to struggling US automakers.
The short-term loan package of at least 15 billion dollars, could be a lifeline to keep the Big Three automakers afloat, even though it is half of what the automakers originally sought to prevent bankruptcy.
"There is no final deal, but an agreement in principle," a source close to Democratic lawmakers told AFP, speaking on condition of anonymity.
After locking horns with the White House over whether to borrow cash from a federal loan program for green auto technologies, Democrats dropped their opposition following the release of gloomy official data showing 533,000 US jobs were lost last month alone.
As auto chiefs pleaded for an urgent rescue, Democratic House Speaker Nancy Pelosi signaled her approval for a loan from the 25-billion dollar energy-efficient stimulus fund, but said the "short-term and limited assistance" must be swiftly repaid.
"We will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative," she said.
Chiefs of General Motors, Chrysler and Ford, which employ millions of US workers, this week warned of the industry's imminent demise if Congress and the White House didn't reach a compromise on the funding showdown.
Democrats previously called on the White House to tap an already approved 700-billion-dollar finance industry bailout known as the Troubled Assets Relief Program (TARP) to rescue the firms.
But President George W. Bush insisted the money should come from diverting 25 billion dollars in loans for the industry to develop fuel-efficient vehicles.
Media reports said the loan package could be worth 15 to 17 billion dollars, or about half of the 34-billion-dollar bailout Big Three chiefs said was necessary for them to survive.
Congressional aides told The Washington Post that the package aimed to sustain automakers through March, after president-elect Barack Obama will have moved into the White House and the new Congress is in office.
Legislation on the plan is expected to be "brought up for a vote in the House next week," said Pelosi.
The compromise is expected to free up the remaining 350 billion dollars from the 700-billion-dollar TARP fund to bail out the financial industry.
Senate Majority leader Harry Reid said he hoped his chamber would also vote on a bailout in a lame-duck session, and pressured Republicans to help push the rescue bill through.
"We will need support and cooperation from Republicans to determine when that vote happens and whether it will succeed," Reid said, adding that the auto hearings this week "made clear that we cannot let these companies fail."
Bush warned after the half-a-million job loss announcement for November that at least one of the Big Three automakers may not weather the current economic storm.
Expressing skepticism of an industry rescue, Bush said: "I am concerned about taxpayer money being provided to those companies that may not survive."
In the hearings before Congress Ford CEO Alan Mulally made clear the failure of one of the major companies could result in the demise of its competitors.
"If one of us goes in, it has the potential to take all of us in," he said.
Some lawmakers insist the firms should use bankruptcy protection as they restructure, but auto executives maintain the move would prompt consumer confidence in their products to plummet.
In exchange for any assistance, the auto companies will have to submit to strict government oversight to ensure loans are used effectively.
The bosses appeared at acrimonious hearings two weeks ago but were sent back to Detroit empty-handed and told to retool their restructuring plans.
They present programs this week that includes cuts in jobs and costs, the sale of subsidiaries, and the demise of unprofitable models.
GM requested a total of 12 billion dollars in short-term loans and a six-billion-dollar line of credit, while Ford said it needed a nine-billion-dollar line of credit and Chrysler said it needed seven billion dollars by December 31.
United Auto Workers chief Ron Gettelfinger warned on Thursday that time was short.
"I believe that we could lose GM by the end of the month," he said.
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