Congress Sends White House Auto Bailout Plan
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.
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.