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Source: Reuters -
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White House and Democratic negotiators pushed to clinch a deal that would provide $15 billion in loans to US automakers, force the wounded giants to answer to a "car czar" and make the government their biggest shareholder.
The administration and congressional Democrats said progress was being made on a measure to save General Motors Corp and Chrysler LLC from bankruptcy, but it likely would not be finalized until at least Wednesday.
"We're still working through a number of issues, some of them just small and technical and other ones a little bit more meaty," said White House press secretary Dana Perino.
"We want to complete this as soon as possible," said Senate Majority Leader Harry Reid, a Nevada Democrat. "The American people want us to make a decision."
President George Bush and many of his fellow Republicans in Congress have pushed for tougher assurances automakers would be able to retool and survive if given a cash infusion.
Senate Republican leader Mitch McConnell, a Kentucky Republican, complained that the initial Democrat proposal presented to the White House on Monday "is deeply flawed."
"It fails to assure taxpayers ... that they will not be asked to shell out billions more a few years or even a few months from now," McConnell said.
Democrats control Congress and are expected to push a bill through the House of Representatives. But they may run into trouble in the normally 100-member Senate where Republicans could raise a roadblock that would take 60 votes to clear.
A top Republican aide, who earlier this week predicted passage of such a measure, voiced caution, saying a number of Republicans would want a chance to amend the bill.
"It's not going to be a dunk," the aide said. "Democrats are going to have to be careful about dropping a bill on us without allowing an amendment or two."
Democrats need Republican votes
With President-elect Barack Obama having recently resigned from
his Senate seat, Democrats hold the chamber 50-49. Democrats figure
at least a few Democrats may oppose a bailout and they will need 12
to 15 Republicans to get the 60 votes to move toward passage of a
bill, a senior aide said.
GM and Chrysler have appealed for emergency loans to avert
potential collapse as their cash holdings dwindle at a time when
auto sales have plunged to 26-year lows, making them one of the
biggest victims of the global financial crisis.
Ford Motor Co, considered the strongest of the three Detroit automakers, has sought a line of credit to be tapped if its own finances worsen more than expected.
An auto bailout has evoked competing emotions in Congress.
Lawmakers fear if automakers collapse, it would deepen the US
recession. But many say market forces, not a government saddled
with a record deficit, should determine their fate.
There is also reluctance to provide another federal rescue in wake
of the voter backlash against Congress for its passage of a $700
billion bailout for Wall Street in October.
At the same time, many argue that if Congress provided relief for millionaires in the US financial industry, it should also help blue-collar autoworkers facing unemployment.
Automakers have had powerful friends in Congress over the years who have shielded them from adopting costly and stricter fuel efficiency standards.
But they also had critics who complained automakers were led by poor executives who stuck to producing gas-guzzling vehicles unable to compete with smaller, foreign-made ones.
In Canada, where US automakers have production plants, the government said it aims to hammer out details of its own multibillion-dollar package of loans by late January.
Call for 'car czar'
In Washington, Democratic lawmakers proposed providing immediate loans to GM and Chrysler while the companies go to work on detailed restructuring plans that would be due by the end of March.
A key provision of the Democratic proposal is the creation of an oversight office to be led by a presidentially appointed trustee, or "car czar."
That official would have powers to shape restructuring, withholding further loans if progress toward a turnaround stalled.
Analysts said the process amounts to putting GM and Chrysler
through the kind of restructuring typically achieved in bankruptcy
as its union workers, creditors and investors are all forced to
make sweeping sacrifices.
Shares of GM and Ford rose more than 20% on Monday on prospects for
a rescue deal but gave back some of those gains on Tuesday. Ford
and GM shares were off 4% in midday trade. Chrysler is owned by
private equity firm Cerberus Capital Management.
The plan would grant the government the right to acquire preferred shares, or the economic equivalent, equal to 20% of the amount loaned.
At GM, that could mean the government would end up with half of the equity in the top US automaker before factoring in any new shares the company would issue as part of an effort to cut debt by $30 billion, analysts said.
Deutsche Bank analyst Rod Lache said this "dilution" of GM's equity as it restructures was likely to drive its share price toward zero.
House Speaker Nancy Pelosi said a "car czar" could be named as early as this week if a deal with the Bush administration is reached on emergency loans and swiftly approved by Congress.
Pelosi suggested a possible choice of former Federal Reserve
Chairman Paul Volcker, who is President-elect Barack Obama's top
adviser on tackling US economic woes.
