Congress Sends White House Auto Bailout Plan

Congressional Democrats have sent the White House a draft of a roughly $15 billion auto bailout that is expected to come to a vote this week. The automakers say they will run out of money without the cash infusion.

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ROBERT SIEGEL, host:

From NPR News, this is All Things Considered. I'm Robert Siegel. In this hour, our first few stories are the sort of stories that we're becoming accustomed to in these economic times. First, Congress has come up with a rescue plan for the auto industry. It involves billions of dollars. GM says publicly to the American people, we have disappointed you, and the Tribune Company, which owns major newspapers and the Chicago Cubs files for bankruptcy.

But first, to Congress and its plan for GM, Ford, and Chrysler. It is short term that includes about $15 billion in emergency loans, and it requires the Big Three to reinvent themselves. Joining us now from Capitol Hill is NPR's Brian Naylor. First of all, Brian, $15 billion, where does it come from, and where does it go?

BRIAN NAYLOR: Robert, right. It comes from money that was appropriated last year, part of the energy bill which set up a $25 billion fund for car makers to retool to make more efficient models. But, in fact, legislative analysts say that only $15 billion would really be available for this sort of use.

And the money goes to two of the Big Three automakers, presumably GM, which says it needs $4 billion just to make it to the end of the month to stay in business, and another $4 billion early next year to stay afloat. And Chrysler says it needs $7 billion to avoid bankruptcy. For now, Ford at least says it's doing well enough to get by without immediate government assistance, although they said last week that a standby line of credit would be nice, but that's not in this particular package.

SIEGEL: And conditionality, I mean, in return for those loans, what do the car companies have to do?

NAYLOR: Well, it's still being worked out. There are still - there are negotiations going on right now as we speak. One thing's for sure, Congress and the White House want to see a plan to make these companies viable down the road in the long term.

House Speaker Nancy Pelosi in a news conference this afternoon spoke about how everyone needs to take a hair cut or get a hair cut. Basically, that means shared sacrifice, bond holders, management of the auto companies, autoworkers, the UAW all would have to be required to make some kinds of sacrifice. And the lawmakers and the White House want to see restructuring of the automobile industry and accountability.

SIEGEL: Right away. This is a very short-term project.

NAYLOR: That's right.

SIEGEL: What they're doing. I gather there's going to be a...

NAYLOR: Or at least, plans.

SIEGEL: Plans to do so.

NAYLOR: Yeah, yeah.

SIEGEL: A car czar will oversee all of this.

NAYLOR: Right.

SIEGEL: Who is the car czar going to be?

NAYLOR: Car czar.

(Soundbite of laughter)

NAYLOR: Well, we don't know for sure yet. There have been names that have been floated out there, but they've also been - they've been shot down, so I don't know if it's worthwhile getting into that. But, you know, it's interesting because Congress wanted a broader board of oversight, but the White House insisted that the president should appoint one individual to - should be made responsible for overseeing the industry, making sure that they use the loans well and prepare for consequences if it doesn't. That person would be appointed by President Bush.

SIEGEL: Mm hmm. So the idea of the car czar presumably would satisfy the White House. What has the White House reaction been to all this today?

NAYLOR: Well, from what we've been able to see, it's been kind of lukewarm. There's been a lot of back and forth. You know, the Democrats originality wanted to use money from the so-called TARP Fund, that $700 billion bailout of the financial services industry. The White House insisted that that money not be used for anything but the financial sector. So the Democrats gave in on Friday and said, OK, you can take it from the energy bill, but apparently, there's still a few other details yet to be worked out.

SIEGEL: OK, NPR's Brian Naylor talking about Congress's plan to help the auto companies. Thank you, Brian.

NAYLOR: Thanks, Robert.

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White House, Congress Near $15B Auto Rescue Deal

The White House and congressional Democrats continued to hammer out the details of a $15 billion rescue plan for the U.S. auto industry, but they appeared to be close to a deal, lawmakers said Monday.

The plan — which is expected to come up for a vote this week — is likely to include the appointment of a government monitor, who would oversee the restructuring of Ford Motor Co., General Motors Corp. and Chrysler LLC.

The monitor would be appointed by President Bush.

House Speaker Nancy Pelosi said the bailout is expected to help the auto industry survive until spring 2009. But she said the automakers would be required to show they have plans to turn their companies around.

"Come March 31, it is our hope that there will be a viable automotive industry in our country with transparence and accountability to the taxpayer," she said. "We think that is possible."

Rep. Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee, said the remaining disagreements with the White House could be resolved in a few hours.

White House Press Secretary Dana Perino also offered encouraging words.

"We've made a lot of progress in recent days to develop legislation to help automakers restructure and achieve long-term viability," she said. "We'll continue to work with members on both sides of the aisle to achieve legislation that protects the good faith investment by taxpayers."

The companies would be required to give the monitor access to their financial information, including company records and other data. Company executives would also have to get permission from the government's monitor to enter into business transactions that would cost $25 million or more, reports said.

The measure would provide for emergency loans to flow to the automakers before the end of December.

The "car czar" would have a Jan. 1 deadline for developing criteria to assess the automakers' progress. That person would also have the ability to recall the loans as soon as February if the companies' reorganization efforts were not adequate to ensure their viability.

From wire reports

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