US carmakers' best chance for aid is with Congress
By John Crawley and Jeremy Pelofsky
WASHINGTON, USA - The U.S. auto industry's best chance for $25 billion(S$37.3 billion) in immediate government help to survive a steep financial slide rests with Congress, which may have a brief window to act next week.
The Bush administration has not dismissed outright the possibility of extending emergency assistance to General Motors Corp, Chrysler LLC and Ford Motor Co, which are desperate for help, with their finances in shambles. GM's nightmare descent worsened with new analyst downgrades and another inauspicious drop in its already anemic shares.
But public and private statements from administration officials indicated more clearly on Monday that they believe any new and substantial money for manufacturers would require legislative action.
Ideas kicking around Capitol Hill range from changes to the ongoing $700 billion financial bailout program, putting automakers in any economic stimulus package, or a stand alone bailout package, according to aides and lawmakers.
"I'll just say that Congress will have an opportunity when it returns next week to consider if it wants to do anything in addition for the automakers," White House spokeswoman Dana Perino said.
The Senate is due to return for a brief post-election session, while the House of Representatives has no formal meeting planned, although members are expected back for leadership elections.
Top congressional Democrats asked Treasury Secretary Henry Paulson in a letter on Saturday to consider aid to General Motors Corp, Ford Motor Co and Chrysler through the financial bailout initiative that has so far covered banks and other financial services companies.
Perino said Treasury would respond to the letter from House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.
Sen. Sherrod Brown, an Ohio Democrat, spoke with Paulson on Sunday and said in a statement that Congress should approve new low interest loans. Brown also said Paulson should use his authority to help "secure the industry and save jobs."
The Treasury has already rebuffed GM's request for capital to help facilitate a possible merger with Chrysler.
GM, Ford and Chrysler executives met Pelosi and Reid last Thursday on the potential for urgent congressional help, arguing they were too important to the overall economy to wither or even fail.
The companies are looking for up to $25 billion in emergency loans that backers say is needed to prevent the industry's collapse. U.S. auto sales are plunging and Ford, Chrysler and GM are burning through billions of dollars in cash monthly.
Automakers blame their accelerated decline on the global credit crisis that has restricted corporate borrowing and consumer loans for auto purchases. Most buyers finance their vehicles.
GM shares hit a 62-year low of $3.02 on Monday after analysts downgraded the company due to liquidity concerns.
Deutsche Bank AG lowered GM's equity value to zero from $4, saying the automaker may not be able to fund operations beyond December. GM shares closed off 23% on the New York Stock Exchange at $3.36. Ford shares closed down 4.5% at $1.93. Chrysler is privately held by Cerberus Capital Management LP.
A senior administration official said on Monday that Congress most likely would have to issue new directions to satisfy the automakers' appeal, noting the bailout for financial services companies is not really an option as it is currently structured.
"I don't know what else could fit into that direction, unless someone comes up with something creative," the official said.
One quick fix could include changes to a $25 billion loan program approved in September to help Detroit develop more fuel efficient cars.
The White House accelerated regulations for administering that financing, but automakers do not believe the money - with tight conditions on its use - can be unlocked fast enough to help them survive.
Perino said the White House would listen to any proposals Congress may have for accelerating those loans to viable companies.
