Automakers Likely To Get $15B Bailout
Congress and the White House are working toward a $15 billion short-term agreement to bail out the auto industry. Senate Majority Leader Harry Reid says Congress could act on an auto bailout as early as the end of the day.
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MADELEINE BRAND, host:
From the studios of NPR West, this is Day to Day. I'm Madeleine Brand.
ALEX COHEN, host:
And I'm Alex Cohen. Coming up, Illinois Governor Rod Blagojevich is accused of selling President-elect Barack Obama's Senate seat to the highest bidder. Federal investigators have taken him into custody.
BRAND: First though, negotiators from Congress and the White House are still working on the details of an auto industry bailout.
COHEN: The short-term plan would give automakers access to $15 billion in emergency loans. General Motors and Chrysler say they need money now to make it through the holidays. NPR's David Welna is watching developments on Capitol Hill, and he joins us now. David, tell us what is in the draft bill that Congress has sent to the White House?
DAVID WELNA: Well, Alex, as you've mentioned, there's a money. It's what's often called a bridge loan. It's essentially the money that both Chrysler and GM say that they need to get by for the next two months. Ford, interestingly, is not seeking any of the $15 billion for now, at least. They say that they're healthier than the other companies.
This money is coming from funds that Congress had earmarked earlier this year for greening the U.S. auto industry, to help them retool and make more fuel-efficient cars, and it's not clear whether those funds are going to be replenished or how.
Also, there are restrictions on the car companies. They won't be able to keep their corporate jets. Bonuses are banned for the 25 highest-paid employees. The firms will have to drop lawsuits that they brought against states that have passed tough greenhouse-gas-emission laws, and this is all aimed at getting a long-term viability plan from the carmakers by March 31st.
House Financial Services Chairman Barney Frank, when he unveiled the details of this bill, made clear that many of its provisions were crafted to get buy-in from the White House.
Representative BARNEY FRANK (Democrat, Massachusetts): 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. There are a couple of specific issues to be negotiated. I think they can be worked out.
COHEN: David, how has President Bush reacted to this plan?
WELNA: Well, you know, he got one big item that he wanted, which was to have the funds come from the money that's earmarked for retooling the auto industry. But the White House has made it clear also that it opposes that possible requirement that Washington approve all transactions over $25 million, and it's also opposed to making the car companies drop their lawsuits against the states that have passed tougher greenhouse-gas laws. So, it's not jumping up and down about this.
COHEN: There's been a lot of talk about a so-called car czar who would oversee the car industry. What powers would this person have?
WELNA: Well, this would be someone who would be appointed by President Bush, who would see that the car industry is sticking to the terms of the agreement, and if they don't, they'd have to repay this seven-year loan early. The car czar would also likely try to get all the parties involved - the management, union, the shareholders, the creditors - get all of them together and have them take a haircut. That's the term that House Speaker Nancy Pelosi use to describe the sacrifice that each player is going to have to make under this deal.
House Speaker NANCY PELOSI (Democrat, California): We want to recognize the importance of the automotive industry to our country. Its survival is important to our economy. If they cannot survive, then we have to make an evaluation of the leadership of that industry as well because we will not give up on our automotive industry.
COHEN: Finally, David, will Republicans go along with this plan?
WELNA: Well, you know, it's not looking good for this getting enough votes in the Senate to move forward, at least as it's drafted right now. It only takes 41 senators to hold things up, and Senate GOP Leader Mitch McConnell today essentially rejected the bailout bill drafted by Democrats.
He said it's really just subsidizing the problem rather than solving it, and he noted that it does not address some of the most vexing issues for Detroit, especially the costly retirement plans. And polls show that Americans oppose this as well, and I think Republicans want to be on that side of public opinion. So, it may take further tinkering if this bill's to move forward.
COHEN: NPR's David Welna. Thank you.
WELNA: You're welcome, Alex.
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Congress, White House Near Auto Bailout Deal
House Speaker Nancy Pelosi (D-CA), right, speaks to reporters Monday about the auto industry rescue plan as House Financial Services Committee Chairman Barney Frank (D-MA) looks on.
House Speaker Nancy Pelosi (D-CA), right, speaks to reporters Monday about the auto industry rescue plan as House Financial Services Committee Chairman Barney Frank (D-MA) looks on.
In Focus
Congressional Democrats and the White House on Tuesday are expected to finalize a $15 billion emergency loan package to help save millions of jobs connected to the nation's troubled auto industry.
Talks to prevent the collapse of General Motors Corp. and Chrysler LLC have intensified in recent days, with the broad outline of a plan emerging Monday. GM, Chrysler and Ford Motor Co. directly employ about 350,000 people, and millions of other workers depend on the industry.
Under the deal taking shape, GM and Chrysler would get emergency loans on Dec. 15. Then an overseer — a kind of "car czar" — would write guidelines, due on the first of the year, for restructuring the Big Three automakers. If the car companies haven't taken enough steps to reinvent themselves by Feb. 15, the overseer could recall the money.
The White House was seeking even tougher measures that would have allowed the car czar to force automakers into bankruptcy if they don't cut labor costs, restructure debt and downsize.
Congressional officials said Kenneth Feinberg, the lawyer who oversaw the federal Sept. 11 victims' compensation fund, is under consideration for the car czar post.
The Bush administration has maintained that any plan must include best efforts to guarantee that taxpayer dollars are paid back and that the automakers are able to reorganize and compete.
Deputy White House press secretary Tony Fratto said Tuesday, "We made progress and hope to continue making progress. We want to move quickly, but it's important that we get the policy right."
As the head of the United Auto Workers voiced fresh confidence that an agreement will be reached, House Speaker Nancy Pelosi (D-CA) told NBC's Today show that "it's very important" for the Big Three to be forced to change and not be "left to their own devices."
Pelosi said she thinks taxpayers should consider the plan "a second chance" for the industry — not a bailout.
UAW President Ron Gettelfinger, appearing on CBS's The Early Show, would not say whether his union would demand a seat on GM's board of directors in exchange for contract concessions. But he did say that "if we're going [to] be asked to give up more, and it appears that we are, then we should have an equity stake in the company."
Robert Lutz, GM's vice president of global product development, also appearing on CBS, said his company is ready to accept a federally appointed czar.
Despite optimism on both sides that Congress and the White House could reach a quick deal, it is still unlikely to be an easy sell on Capitol Hill.
"While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done," Senate Majority Leader Harry Reid (D-NV) said. "This is no blank check or blind hope."
From wire reports
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