$15 Billion Bailout Puts Car Czar In The Driver's Seat
STEVE INSKEEP, host:
It's Morning Edition from NPR News. Good morning, I'm Steve Inskeep.
RENEE MONTAGNE, host:
And I'm Renee Montagne. We're reporting this morning on businesses filing for bankruptcy and businesses straining to avoid it.
INSKEEP: The economy has struck everything from newspapers to a leading opera company, as we'll hear in a moment. We begin with two carmakers that say they need help to survive this year.
MONTAGNE: General Motors and Chrysler are both in trouble. Ford says it's healthier, but all three are seeking help. Now Congress and the White House are working on the terms of a rescue plan.
INSKEEP: Those negotiations include the possibility of a car czar who would oversee a restructuring of the car companies. NPR's Brian Naylor reports.
BRIAN NAYLOR: After committing $700 billion to the financial services industry with uncertain results, Democrats in Congress are now trying to come to the aid of struggling automakers, although if you listen to Senate Majority Leader Harry Reid, it's more out of a sense of obligation than enthusiasm.
Senator HARRY REID (Democrat, Nevada; Senate Majority Leader): The jobs of millions of American workers are at stake, along with the financial security of millions of families. So while we take no satisfaction in loaning taxpayer money to these companies, we know it must be done.
NAYLOR: Democrats have agreed to take $15 billion for the short-term loans from a fund that had been set aside to help carmakers retool to make more efficient vehicles. That was a concession to the White House, which insisted that the financial bailout money remain off limits to car makers. In return, the car makers must show they have a viable future in order to qualify for further assistance when the short-term money runs out. And there will have to be sacrifices, says House Speaker Nancy Pelosi.
Representative NANCY PELOSI (Democrat, California; Speaker of the House): We call this the barbershop. Everybody's getting a haircut here in terms of the conditions of the bill.
NAYLOR: Among those who will have to get trimmed, say Democrats, are management, shareholders, dealers and autoworkers. The CEOs of the Detroit Three testified last week their companies are in dire shape. Without $4 billion this month, GM executives say the nation's largest car maker won't make it into next year. Chrysler says it needs 7 billion now. Ford says it wants a standby line of credit in case the other companies fail.
As Democrats see it, the short-term loans would help the automakers survive into the spring, when a larger Democratic majority in Congress and a Democrat in the White House may be more sympathetic. Massachusetts Democrat Barney Frank says Congress has gone a long way to meeting White House demands.
Representative BARNEY FRANK (Democrat, Massachusetts; Chairman, House Financial Services Committee): We have been able to send them a bill that we believe, as we understand the conversations, meets what they think is necessary. So that if there is a real desire to get this thing done and prevent adding another disaster to our economic situation, we should have it.
NAYLOR: The legislation would set up an overseer to administer the loans and the company's implementation of their recovery plans - what's come inevitably to be known as a car czar. Pelosi vowed there would not be, in her words, an endless flow of money to the industry. Still, the measure is likely to be a tough sell in the Senate, where 40 Republicans could block it. Alabama's Jeff Sessions is a likely no vote. His state is home to a number of foreign-based car makers' plants, including Mercedes Benz and Hyundai. Sessions says the best thing domestic car makers could do is file for bankruptcy under Chapter 11.
Senator JEFF SESSIONS (Republican, Alabama): Once you start putting money in a sinking company, as any banker will tell you, they refer to it as putting good money after bad. The more money you put into a corporation, the deeper they got you. You're the one that is hooked. You're the one that's stuck now.
NAYLOR: According to a new CBS news poll, Americans are evenly divided over an auto industry bailout. Other surveys have shown less support for taxpayer dollars going to car makers. Democrats hope to have a bill the president will sign on his desk by week's end. Brian Naylor, NPR News, the Capitol.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.