Automakers told to apply for a loan; White House scolds Congress

 3 comment(s)  
 E-mail Story
 Print Story
  Share

 digg it!
 Facebook
 del.icio.us
Seed Newsvine
Fark It
Reddit

Text Size: 

Tools Sponsor

By The Associated Press

WASHINGTON — Democratic leaders ordered Detroit’s Big Three automakers Friday to submit what amounts to a detailed loan application to Congress so lawmakers can decide whether to give the beleaguered industry an emergency $25 billion lifeline.

In a letter to the auto executives released Friday afternoon, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid demanded a detailed accounting by Dec. 2 of the companies’ financial condition and short-term cash needs, as well as how they would achieve long-term viability.

“The auto companies’ shareholders, business partners, and prospective benefactors — the American people — deserve to see a plan that is accountable to taxpayers and that is viable for the long-term,” Pelosi, D-Calif., and Reid, D-Nev., wrote.

[+]Enlarge

In this file photo, a visitor walks past Gulfstream business jets at the Asia Business Aviation Conference & Exhibition in Hong Kong. Some in Congress pounced on what they view as the hypocrisy of auto executives flying on corporate jets to Washington to ask for public help Wednesday, Nov. 19, 2008. But defenders say that what some call a lavish perk is in reality a necessary security requirement and productivity booster for top corporate officials. (AP Photo/Kin Cheung, File)

In this file photo, a visitor walks past Gulfstream business jets at the Asia Business Aviation Conference & Exhibition in Hong Kong. Some in Congress pounced on what they view as the hypocrisy of auto executives flying on corporate jets to Washington to ask for public help Wednesday, Nov. 19, 2008. But defenders say that what some call a lavish perk is in reality a necessary security requirement and productivity booster for top corporate officials. (AP Photo/Kin Cheung, File)

The Democrats also called on the automakers to show how they would ensure that the government would be reimbursed and share in future profits, eliminate dividends and lavish executive pay packages, meet fuel-efficiency standards, and address their health care and pension obligations to workers if they got the federal help.

The Bush administration sharply criticized the Democrats for departing Washington for a congressional recess without acting on a rescue for the car makers.

“How could they leave town when the auto companies were just here (this) week saying some of them were on the verge of running out of cash?,” Commerce Secretary Carlos Gutierrez said in an interview. “I think it’s a very irresponsible attitude toward a very serious matter.”

White House press secretary Dana Perino said it was “appalling that Congress decided to leave town without addressing a problem that they themselves said needed to be addressed.”

And President George W. Bush himself went on the offensive — although with more reserved language — to press the point that leaders failed to grab onto a bipartisan proposal.

“Unfortunately, the leadership in Congress adjourned without even allowing this measure to come up for a vote,” Bush said in his Saturday radio address, taped Friday and released early by the White House. “My position is clear: If the automakers are willing to make the hard decisions needed to become viable, they should be able to receive the funds Congress already allotted to them for other purposes.”

After making an auto bailout a top priority of this week’s brief postelection session, Democrats scrapped planned votes on a rescue plan they said lacked support — or a clear justification. They said their request for a plan from the Big Three was designed to give General Motors Corp., Ford Motor Co., and Chrysler LLC another chance — after a disastrous pair of hearings this week on Capitol Hill — to make their case to lawmakers and the public, she said.

“It’s another opportunity for them to say to the American people, ’Give us your money, because we will put it to good use,’ “ Pelosi, D-Calif., told reporters.

Hearings are expected the week after next and lawmakers could consider legislation during the week of Dec. 8, but only if the industry shows that taxpayers and auto workers would be protected, congressional leaders said.

U.S. automakers are struggling to stay afloat heading into 2009 amid an economic meltdown, a precipitous drop in sales and a tight credit market. The three companies burned through nearly $18 billion in cash reserves during the last quarter and GM and Chrysler have said they could collapse in weeks.

Detroit’s car makers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars. If just one of the automakers declared bankruptcy, some estimates put U.S. job losses next year as high as 2.5 million.

Democratic leaders acknowledged Thursday that their favored approach — carving the $25 billion in loans from the $700 billion Wall Street bailout fund — lacked enough support in Congress, particularly after the auto executives’ poor performance in high-profile appearances on Capitol Hill.

The chief executives of the Big Three urged lawmakers to sign off on the loans this week, saying the economic meltdown had staggered their industry after they had taken steps to restructure and produce more fuel-efficient cars.

But they were roundly criticized for traveling aboard corporate jets to seek billions in government aid and failing to assure lawmakers they wouldn’t need more money.

Automakers have promised to submit the blueprint Democrats have demanded.