WASHINGTON (AP) - The government would order a major
restructuring of Detroit's struggling Big Three auto companies in
exchange for a multibillion-dollar bailout under a plan circulating
Skeptical lawmakers are weighing whether to dole out as much as
$34 billion in aid to the automakers as the once-mighty companies
make their second round of pleas for government help to keep them
from collapsing by year's end and potentially deepening the
nation's already painful recession.
With several lawmakers in both parties pressing them to consider
a pre-negotiated bankruptcy - something they have consistently
shunned - members of Congress and the Big Three both were
contemplating a government-run restructuring that would yield
similar results, including massive downsizing and labor givebacks.
U.S. auto executives were appearing before the House Financial
Services Committee for the second time Friday to outline their
plans for staying afloat with a government infusion.
The rescue, though, was facing fresh obstacles in Congress, with
lawmakers still unconvinced they should support yet another bailout
and congressional officials saying a leading proposal for helping
the carmakers wouldn't come close to covering the cost.
"We're looking at a death sentence" for the auto companies,
Sen. Chris Dodd, D-Conn., the Senate Banking Committee chairman,
said Thursday, pledging to try to help the Big Three. He quickly
added, "I'm not a miracle worker and no one here is."
Finding the money was proving to be an uphill battle.
Congressional budget analysts said one leading proposal - to use an
already approved fund set aside for making cars environmentally
efficient - would provide just $7.5 billion - a fraction of what
General Motors Corp., Ford Motor Co. and Chrysler LLC say they
Chrysler President Jim Press on Friday suggested the market for
the Big Three's cars could evaporate quickly without emergency aid.
"All this talk of bankruptcy has caused our customers and our
suppliers to have a lack of confidence, we've got to restore that
confidence," Press said on CBS' "Early Show." "By the first
quarter, we could run into difficulty paying our bills."
Democratic congressional leaders are leaning on President George
W. Bush to tap into the already enacted $700 billion Wall Street
bailout fund to aid the auto industry, arguing that a carmaker
collapse would have a devastating impact on the financial firms the
program is designed to help.
The Bush administration has said it has no intention of doing
so, arguing that the money was supposed to be for financial
institutions, and instead wants to convert the fuel-efficiency
money into emergency loans.
Auto state lawmakers are threatening to block the administration
from accessing the second half of the financial rescue fund unless
it comes to the aid of the Big Three.
And President-elect Barack Obama wasn't stepping forward with an
alternative. Rep. Barney Frank, D-Mass., who has been dealing with
both the financial bailout and the auto rescue proposal as chairman
of the House Financial Services Committee, said Obama is "going to
have to be more assertive than he's been."
Repentant after a botched first crack at bailout pleas, the
companies' executives said they were willing to overhaul their
companies and own up to past errors.
"We made mistakes, which we're learning from," GM chief Rick
Wagoner said. Ford CEO Alan Mulally also acknowledged big missteps,
saying his company's approach once was "If you build it, they will
"We produced more vehicles than our customers wanted, then
slashed prices," he said. But as a result of these past mistakes,
"we are really focused," he said.
United Auto Workers union President Ron Gettelfinger, aligned
with the industry in pressing for the aid, told senators that any
kind of bankruptcy, even a prepackaged one, was not "a viable
option." Gettelfinger said consumers would not buy autos from
bankrupt companies, no matter the terms of the arrangement.
He also warned that without action by Congress: "I believe we
could lose General Motors by the end of this month." He said the
situation was dire.
It wasn't enough for some skeptics.
"I don't know how they're going to make it," Sen. Richard C.
Shelby, R-Ala., said of the auto makers.
Shelby said Chapter 11 bankruptcy was their way to stay in
business. Asked Friday morning on CBS whether there was anything
the auto executives could say to change his mind about government
aid, Shelby said: "Absolutely not."
Associated Press writer Ken Thomas contributed to this report.
(Copyright 2008 by The Associated Press. All Rights Reserved.)