Congress, torn between trying to run a country, save Wall Street and the banking industry, has had their hands full. In the midst of all that it appears they are close to agreeing on short term loan condtions for the auto industry. Here are the basics:
Provide emergency loans to GM and Chrysler
Create a presidentially named “car czar.”
Supervise a broad industry restructuring
Read the entire article below.
Top Senate Democrat sees auto bailout by Wednesday
By JULIE HIRSCHFELD DAVIS, Associated Press Writer
WASHINGTON – Congress and the White House pushed to clear the final obstacles to a $15 billion bailout of the auto industry on Tuesday, seeking agreement by day’s end followed by swift passage.
The unresolved issues included the precise extent of the authority to be given to a powerful new auto czar named by President George W. Bush, according to congressional aides, although it was clear the companies could be forced to return any aid if they did not use the money to ensure their long-term survival.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, privately briefed House Democrats on the emerging deal Tuesday and told reporters afterward that he expected to seal it by day’s end.
“The room was pretty supportive” of the developing bill, Frank said.
Senate Majority Leader Harry Reid said he hoped for a vote by Wednesday, but would keep the Senate in session through the weekend if necessary to complete work on the bailout. Democrats and White House officials traded legislative proposals behind the scenes, closing in on agreement.
The core of the bill – and its aim – was not in dispute. It would provide emergency loans to two of Detroit’s Big Three auto makers – Ford Motor Co. has said it doesn’t need an immediate cash transfusion – and create a presidentially named “car czar.” The federal overseer would supervise a broad industry restructuring and would be empowered to yank the money back if the carmakers weren’t doing enough to ensure their own survival.
The fast-paced developments come amid an environment of general economic instability, the Congress and the presidency both in transition, a ricocheting Wall Street and the Federal Reserve Board, Treasury and other agencies fighting to steady the reeling financial industry.
A final deal hinged on only a couple of outstanding issues, Reid, D-Nev., said.
“We would hope that we could complete work on this Detroit situation tonight or tomorrow,” he said on the Senate floor.
Still, the few differences remaining were significant. The White House and congressional Republicans were demanding tougher consequences for carmakers that couldn’t prove to the government they were viable, including a requirement – rather than an option – for them to be cut off from federal aid.
Republicans also were demanding that Democrats scrap a requirement that car companies getting loans drop their lawsuits against states that impose tougher emissions standards than the federal rules.
Sen. Mitch McConnell, R-Ky., said he was concerned that Democrats were proposing a package that “fails to require the kind of serious reform that will ensure long-term viability for struggling automobile companies.”
With their approach, “We open the door to unlimited federal subsidies in the future,” McConnell said.
The White House has said it shares those concerns.
“There will not be long-term financing if they can’t prove long-term viability,” White House Press Secretary Dana Perino said.
She said the White House and Congress have made a lot of progress.
“I think overall we’re headed in the right direction,” Perino told reporters aboard Air Force One as President George W. Bush headed to West Point, N.Y., for a speech.
“We’re working fast. but we’re also wanting to get it right,” she said, adding that “I don’t know if we’ll have something finalized today. It’s possible.”
Even then, it was far from certain that proponents could muster the votes to push yet another bailout through a skeptical Congress. With some senators in both parties expected to be absent for the debate, garnering the 60 votes that would likely be necessary to pass the bill could be tricky.
Sen. Carl Levin, D-Mich., a key ally of the auto industry, said getting the roughly 15 Republicans needed to support the plan was an uphill battle.
“This is a real hill to climb even if we can get agreement between the White House and congressional leaders,” he said.
Reid said the timing of an auto rescue vote is uncertain, partly because lawmakers are still waiting on the White House to decide whether to request the second half of a $700 billion Wall Street bailout fund. “That decision has not been made yet,” he said.
The current Congress is ready to depart for the year after this week, with the auto bailout legislation among the only things delaying lawmakers’ abbreviated winter break.
Cash from the Big Three bailout would immediately be plowed into General Motors Corp. and Chrysler LLC. Ford has said it does not have an emergency cash-flow problem and that it would not ask for short-term assistance. The czar would come up with terms for restructuring the beleaguered firms by Jan. 1, 2009.
Democrats have already given in to the White House on a key element of the measure – drawing the money from an existing loan program meant to help carmakers finance the production of greener cars.
The proposal would attach an array of conditions to the auto bailout money, including some of the same restrictions imposed on banks as part of the Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends, and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.
The proposal gives the car czar say-so over any major business decisions by the automakers while they’re taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more.
Also under discussion is a requirement that the carmakers taking federal aid get rid of their corporate jets – which became a potent symbol of the industry’s ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government assistance.
Under the Democrats’ proposal, if the Big Three didn’t come up with suitable restructuring plans by the end of March, the czar would have to submit his own blueprint to Congress for a government-mandated overhaul.
Associated Press writers Ben Feller and Jim Kuhnhenn contributed to this report.
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