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Archive for Saturday, December 6, 2008

$15B auto bailout deal in the works

December 6, 2008

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— Stunned by the loss of 500,000 jobs, congressional Democrats and the White House reached for agreement Friday on about $15 billion in bailout loans for the beleaguered auto industry. President George W. Bush warned that at least one of the Big Three carmakers might not survive the current economic crisis.

Several officials in both parties said a key breakthrough on the long-stalled bailout came when House Speaker Nancy Pelosi bowed to Bush’s demand that the aid come from a fund set aside for the production of environmentally friendlier cars. The California Democrat spoke to White House chief of staff Josh Bolten during the day to signal her change in position, they added.

The developments unfolded as desperate auto executives pleaded for a second day with lawmakers for loans to help them survive, and the government reported the worst single month’s job loss in 34 years.

Pelosi’s office issued a statement saying legislation would come to a vote in the House next week. The Senate is also scheduled to be in session to consider steps to aid Detroit’s Big Three.

“Congress will insist that any legislation include rigorous and ongoing oversight to guarantee that taxpayers are protected and that resources are directed to ensure the long-term viability and competitiveness of the American automobile industry,” Pelosi’s statement said.

In a subsequent statement, she added that the billions originally ticketed for development of more environmentally friendly cars would be repaid “within a matter of weeks.” Democrats said her hope was to include the funds in an economic recovery bill that lawmakers are expected to prepare for President-elect Barack Obama’s signature shortly after he takes office.

Officials in both parties also said the legislation would include creation of a trustee or group of industry overseers to make sure the bailout funds were used by General Motors Corp., Ford Motor Co. and Chrysler LLC for their intended purpose. The funds are designed to last until March, giving the incoming Obama administration and the new Congress time to consider the issue anew.

One senior Democratic aide also said Pelosi was seeking a provision that would bar the automakers from using any of the funds to pursue a legal challenge to states seeking to implement tougher auto emission standards. The aide spoke on condition of anonymity because the legislation was not yet drafted.

At the White House, Bush declared the economy was in a recession, and he urged a gridlocked Congress to act quickly on a multibillion-dollar industry bailout — with taxpayer protections.

“We are going to have to have some give here,” replied Massachusetts Rep. Barney Frank, a senior House Democrat, expressing optimism that compromise might be possible. It wasn’t clear whether he was prodding Bush or Pelosi with his comments, but Republicans said there had been no lessening in Bush’s refusal to tap the $700 billion financial industry bailout fund to help the automakers.

There were also fresh calls during the day for the Federal Reserve to come to the rescue of the Big Three, possibly in the form of low-cost loans. And Frank said he had talked with Tim Geithner, President-elect Barack Obama’s choice for treasury secretary, a possible sign of involvement by the incoming administration.

“I am concerned about the viability of the automobile companies,” a somber Bush said as a fresh report showed that employers slashed 533,000 jobs in November.

Comments

Thinking_Out_Loud 6 years ago

So, offtotheright, it would be OK with you to have our only source of vehicles be companies whose parent corporations are overseas?

oldvet 6 years ago

Let them fail... sure, and put a couple of million people out of work... watch the recession turn in to a depression in a heartbeat... but at least the UAW would be crushed... people would line up for miles to take those jobs for half of what they are paying now...

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