White House considers auto bailout options

WASHINGTON (AFP) — The White House said Monday it was studying options for a bailout of the US auto industry without indicating when an announcement would be made.

"We're reviewing automakers financial information, considering our policy options, and when we have something to announce, we'll announce it," said White House spokesman Tony Fratto.

He refused to "confirm or knock down or otherwise read out our contacts or deliberations, timing or substance."

The Big Three US automakers -- General Motors, Ford and Chrysler -- have warned that without a package of loans, millions of jobs could be lost, which would send ripple effects through the nation's already faltering economy.

President George W. Bush, who has hinted the government could tap a massive federal rescue package to aid the automakers, was Monday on his way back to Washington after surprise weekend visits to Iraq and Afghanistan.

His return could speed up a deal, after Bush said: "We're now in the process of working through with the stakeholders a way forward, and we're not quite ready to announce that yet.

He told reporters aboard Air Force One that "this will not be a long process because of ... the fragility of the autos."

Lawmakers have said time is running out for the auto giants, and traded blame with auto union chiefs over last week's collapse in the Senate of a short-term 14-billion dollar rescue bill.

The White House has now said it is ready to consider dipping into a 700-billion dollar Wall Street bailout agreed earlier this year to stimulate the economy and end a credit crunch.

But the Detroit Free Press newspaper reported that the size, scope and timing of any lifeline to the automakers was uncertain.

The White House was interested in two conditions, the paper said. The first was a steep reduction by creditors in automakers' debt, the second was requiring the United Auto Workers (UAW) union to take half the money due for a retiree health-care trust fund in stock, instead of in bonds or cash.

The Wall Street Journal reported Monday that the US government was planning a package of between 10 and 40 billion dollars.

According to the size of the deal, the administration may have to seek congressional approval, with the new Congress not set to meet again until January 6 with a boosted Democratic majority following the November 4 elections.

Republican Senator Bob Corker, who was the Senate's pointman for a series of adjustments to the House of Representatives' bailout bill, said the UAW must make pay adjustments.

"Every car they make, they're at a competitive disadvantage because they are disadvantaged by their labor costs," Corker said Sunday.

In turn, auto representatives accused Republicans of seeking to impose unfair wage cuts.

"We need this money ... this low-interest bridge loan to get us through an emergency situation here, an economic downturn," UAW chief Ron Gettelfinger told CNN, accusing Republicans of politicizing the issue by calling for US manufacturers to bring their pay in line with foreign automakers.

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Focus on White House in auto bailout saga

WASHINGTON, Dec 12 (Reuters-By Matt Spetalnick ) - The Bush administration said on Friday it could be willing to provide emergency aid to the teetering U.S. auto industry, keeping open the prospects for a bailout the day after Congress failed to approve a deal.

Warning of dire consequences for the recession-hit U.S. economy if the once-mighty automakers collapsed, the White House -- in a reversal of policy -- said it was ready to consider dipping into a $700 billion Wall Street bailout fund to help keep the companies afloat.

'The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry,' White House spokeswoman Dana Perino said.

Democratic leaders and the main U.S. auto workers union appealed to Bush's Republican administration -- now in its final weeks before turning over to Democratic President-elect Barack Obama -- to provide emergency funds after a Senate deal to save Detroit's Big Three collapsed in acrimony late on Thursday.

The failure of the $14 billion bailout plan in Congress sent markets reeling around the world. Shares in Toyota Motor Corp the world's biggest carmaker, lost a tenth of their value, and European automakers also closed sharply lower.

But signs that the White House and U.S. Treasury Department were prepared to mount a last-ditch effort to help the carmakers buoyed Wall Street, and large initial losses were mostly recouped.

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Deal reached in principle on $15B auto bailout

Deal reached in principle on $15B auto bailout
By JULIE HIRSCHFELD DAVIS and KEN THOMAS

WASHINGTON (AP) — A government "car czar" with the power to force U.S. automakers into bankruptcy would dole out $15 billion in emergency loans to the failing industry under an emerging deal between the White House and congressional Democrats.

Officials struck an agreement in principle on the measure Tuesday and hoped to finalize it and schedule swift House and Senate votes as early as Wednesday. Money could be disbursed within days to cash-starved General Motors Corp. and Chrysler LLC, while Ford Motor Co. — which has said it has enough liquidity to stay afloat — would be eligible for federal aid.

All three would have to negotiate with labor unions, creditors and others and submit blueprints by March 31 to an industry czar named by President George W. Bush showing how they would restructure to ensure their survival. If not, the emergency loans would be revoked, the companies cut off from further federal help, and the government overseer could order his own overhaul, including forcing them into bankruptcy.

After days of marathon negotiations over the plan, congressional aides and White House officials were still fine-tuning legislative details of the agreement. It could face substantial obstacles from Republican lawmakers, who remained skeptical of the White House-negotiated plan.

A group of conservatives led by Sen. John Ensign, R-Nev., who has threatened to block the measure, planned a midday news conference Wednesday.

As the measure took shape Tuesday, Sen. Mitch McConnell, R-Ky., said he was concerned that Democrats were proposing a package that "fails to require the kind of serious reform that will ensure long-term viability for struggling automobile companies."

With their approach, "we open the door to unlimited federal subsidies in the future," McConnell said.

Getting 60 votes for an agreement, with many senators expected to be absent for the emergency, postelection debate, could be tricky.

Sen. Carl Levin, D-Mich., an ally of the auto industry, said, "This gets us to the 20-yard line, but getting over the goal line will take a major effort, particularly in the Senate."

He called for Bush and President-elect Barack Obama to lobby personally for the auto bailout.

A breakthrough on the measure came when negotiators reached a compromise to require the czar to revoke the loans and deny any further federal aid to automakers that don't strike restructuring deals by next spring. Democrats had proposed giving the overseer that option but not requiring it.

"A great deal of progress has been made on auto legislation that will protect the taxpayer and ensure that short-term financing is available only to companies prepared to undertake the dramatic restructuring necessary to become viable and competitive," Dana Perino, the White House press secretary, said late Tuesday.

One potential stumbling block remained. Democrats' were still refusing to scrap language, vehemently opposed by the White House, that would force the carmakers to drop lawsuits challenging tough emissions limits in California and other states.

That measure "kills the deal," said Dan Meyer, Bush's top lobbyist.

Senior Democratic aides acknowledged as much Tuesday and said they expected the provision to be dropped.

Environmentalists, who count House Speaker Nancy Pelosi, D-Calif., among their closest allies, already were irate that the bailout uses money set aside for a program to help the automakers finance the retooling of their factories so they could produce greener vehicles.

Another remaining hang-up was over ensuring that Cerberus, the private equity firm that owns Chrysler LLC, would reimburse the government if the auto company defaulted on its loan, said a congressional negotiator who spoke only on condition of anonymity because he was not authorized to disclose details of the emerging deal.

The measure would attach an array of conditions to the bailout money, including some of the same restrictions imposed on banks as part of the $700 billion Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.

Also included in the plan is a requirement that the carmakers taking federal aid get rid of their corporate jets — which became a potent symbol when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government assistance.

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Calls for auto exec changes along with rescue!

WASHINGTON (Reuters) - The ailing U.S. auto industry needs changes at the top, an influential Democratic senator said on Monday as Congress and the White House work to complete a plan to save Detroit's Big Three and stem the deepening U.S. recession.

Even if they manage to reach an agreement in principle to provide General Motors Corp, Chrysler LLC and Ford Motor Co with at least $15 billion in short-term loans, it was uncertain if it would become law.

Democrats have a majority in the 100-member Senate, which is to meet on Monday and could begin consideration of legislation within days. But skeptical Republicans could kill such a measure with a procedural hurdle that would need 60 votes to clear.

Democratic Sen. Christopher Dodd, the powerful chairman of the Senate Banking Committee, indicated that any bailout might come with strings attached for auto industry executives, who appeared before his committee last week to plead for help.

"It is not my job to hire and fire, but what I'm trying to suggest is that you need to have new teams in place," Dodd told ABC's Good Morning America show on Monday.

"If you are going to restructure a company you can't be asking the people frankly, many who were involved in creating the problems we're in, to be involved in restructuring."...More

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