US Auto Industry Bailout May Rest with Congress
The US auto industry's best chance for $25 billion in immediate government help may come next week, when Congress returns for a lame-duck session.
The Bush administration has not dismissed outright the possibility of extending emergency assistance to General Motors , Chrysler and Ford Motor , which are desperate for help, with their finances in shambles.
But public and private statements from administration officials indicated more clearly on Monday that they believe any new and substantial money for manufacturers would require legislative action.
Ideas kicking around Capitol Hill range from changes to the ongoing $700 billion financial bailout program, putting automakers in any economic stimulus package, or a stand alone bailout package, according to aides and lawmakers.
"'I'll just say that Congress will have an opportunity when it returns next week to consider if it wants to do anything in addition for the automakers," White House spokeswoman Dana Perino said.
The Senate is due to return for a brief post-election session while the House has no formal meeting planned, although members are expected back for leadership elections.
Prospects for an auto industry bailout. See video at left.
Top congressional Democrats asked Treasury Secretary Henry Paulson in a letter on Saturday to consider aid to GM, Ford and Chrysler through the financial bailout initiative that has so far covered banks and other financial services companies.
Perino said Treasury would respond to the letter from House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.
GM, Ford and Chrysler executives met with Pelosi and Reid last Thursday on the potential for congressional help, arguing they were too important to the overall economy to wither or even fail.
The companies are looking for up to $25 billion in emergency loans to see them through their worst-ever financial downturn.
U.S. auto sales are plunging and Ford, Chrysler and GM are burning through billions of dollars in cash monthly.
Automakers blame their plight on the global credit crisis that has restricted corporate borrowing and consumer loans for auto purchases. Most buyers finance their vehicles.
GM shares hit a 62-year low on Monday. The company has warned that its cash levels may fall below the minimum needed in early 2009.
A senior administration official said on Monday that Congress most likely would have to issue new directions to satisfy the automakers' appeal, noting that the bailout program for financial services companies is not really an option as it is currently structured.
"I don't know what else could fit into that direction," the official said, adding "unless someone comes up with something creative."
Some senior congressional Democrats have said Paulson has the authority through the financial bailout legislation to assist auto companies.
Congress approved $25 billion in low-interest loans in September for Detroit, to help it develop more fuel-efficient cars.
The White House accelerated regulations for administering that financing, but automakers do not believe the money—with tight conditions on its use—can be unlocked fast enough to help them survive.
Perino said the White House would listen to any proposals Congress may have for accelerating those loans to viable companies.