Detroit automakers and the UAW made headway Thursday in their bid for government aid they say they need to survive, as key senators said they would consider approving at least some of the $34 billion the industry wants.
But the senators at the five-hour Senate Banking Committee hearing also made clear that any loans would come with strict conditions and might require that the carmakers prove by March 31 that they were making progress on their turnaround plans.
A few senators said bankruptcy should remain an option for General Motors Corp. or Chrysler LLC, but more said that letting the automakers fail would deepen the growing recession. Sen. Chris Dodd, D-Conn., who ran the hearing and would oversee any plan in the Senate, said that inaction "plays Russian roulette with the entire economy."
Still, he warned that getting a plan approved next week remains daunting.
"Nothing concentrates the mind like a death sentence, and we're looking at a death sentence if we don't respond intelligently and prudently," Dodd said.
Dodd and other Democratic leaders in Congress urged President George W. Bush late Thursday to use his powers under the $700-billion financial industry bailout to make emergency loans to the automakers, saying his administration had all the authority it needed to set strict rules over the industry in return for rescue.
The Bush administration has said the $700 billion needed to be spent on rescuing banks and other financial businesses, but Democrats cited new research showing that a collapse of the Detroit automakers and their suppliers could deliver a severe blow to credit markets.
"The failure of the Big Three would indeed have a major direct and negative impact on the financial sector, not just on the economy as a whole," said Senate Majority Leader Harry Reid, D-Nev., House Speaker Nancy Pelosi, D-Calif., Rep. Barney Frank, D-Mass., and Dodd.
White House spokesman Blair Jones said late Thursday that the bailout was not meant for automakers and that Democrats can't agree on how to help the industry.
The tone of Thursday's hearing was markedly different from two weeks ago, when several senators suggested the auto industry might not be worth saving and criticized the automakers' chief executive officers for lackluster presentations and coming to Washington in corporate jets. On Thursday, the CEOs arrived in hybrid vehicles, including a prototype Chevrolet Volt plug-in hybrid that GM Chairman Rick Wagoner drove to the Senate office building.
Many on the committee, and the automakers themselves, said they favored government overseers with broad powers. One senator suggested such a position could require GM and Chrysler to merge -- an idea the two companies said could save up to $10 billion annually, and one of the CEOs did not oppose.
There were few conditions that the automakers suggested they would not agree to. Chrysler Chairman Bob Nardelli said he'd be willing to resign as part of a government-ordered merger, Wagoner said GM would even agree to file for bankruptcy if it could not prove progress on its survival plan by March 31.
"We're here today because we made mistakes, which we're learning from, and because some forces beyond our control have pushed us to the brink," Wagoner said. "And most importantly because saving General Motors and all this company represents is a job worth doing."
Ford CEO Alan Mulally also noted past mistakes, but contended that Ford was on the right path now, inviting senators "to visit us in Dearborn to kick the tires."
Friday, December 5, 2008
at 6:56 AM |