Big Three automakers try to jump start US bailout
The cash-strapped companies pleaded with skeptical lawmakers Tuesday as time is ticking due to arguments over the bailout plan. -AFP
WASHINGTON - In a last-ditch bid to save their cash-strapped companies, the chiefs of the "Big Three" US automakers were to plead for help from skeptical lawmakers Tuesday as hope fades for a quick congressional bailout.
US Treasury Secretary Henry Paulson voiced opposition to the package, telling lawmakers that the 700 billion dollar US financial bailout program "is not a panacea for all our economic difficulties." While Paulson said it was important to ensure that "none of the auto companies fail, particularly during this period of time," he said "there are
"I believe any solution must be a solution that leads to long-term viability, sustainability viability," Paulson said at a hearing of the House of Representatives Financial Services Committee.
Paulson echoed White House assertions that Congress should instead adapt an existing 25-billion-dollar loan program aimed at helping the auto industry develop more fuel efficient vehicles.
The chairmen and CEOs of General Motors, Ford and Chrysler were to testify later Tuesday to the Senate Banking, Housing and Urban Affairs Committee as Democrats mount a long-odds bid to pass a second 25-billion-dollar rescuepackage for the car industry.
Their testimony, to be followed by an appearance before a House of Representatives panel Wednesday, comes as millions of jobs are threatened as the industry's crippling losses are exacerbated by the economic crisis. In a preview of his remarks, Ford's president Alan Mulally told CNBC Tuesday morning that a failure at even one automaker would have widespread consequences.
"The industry is so interdependent," Mulally said. "We're nearly 10 percent of the US GDP, and if one of the automobile manufacturers gets into serious trouble, it has just tremendous implications for the entire industry." He further warned that a bankruptcy would result in a liquidation, not a restructuring, because "the sales would fall so fast that you could never recover on the cost side and get out of it."
GM has warned it could run out of cash in a matter of weeks and cannot wait until president-elect Barack Obama - who has promised to bail out the sector - is sworn in on January 20.
It launched an ad campaign warning that the entire auto industry is "facing imminent collapse" despite investing billions to restructure their business and improve quality and fuel economy.
A video launched on YouTube and a dedicated website warned that "a collapse would not just be an economic catastrophe, but a serious threat to our national security."
On Monday, Democratic Senate leaders in Congress opened a "lame duck" session vowing to fight for a new loan program for the auto industry. Senior party members condemned the reluctance of the White House and Republican leaders to siphon off funds from a 700-billion-dollar finance industry bailout which was approved in October.
Senate Majority leader Harry Reid hit out at Paulson for refusing to adapt the huge bailout to aid the auto industry, saying: "All it would take is one stroke of a pen and that problem would be solved. "We are seeing a potential meltdown in the auto industry, with consequences that could directly impact millions of American workers and cause further devastation to our economy."
But the White House got in a preemptive strike before lawmakers reported back for work, saying the special rescue funds for banks were not the answer, calling on Congress to adapt an existing 25-billion-dollar auto industry loan
"The administration does not want US automakers to fail, and in fact we support assistance to automakers," Bush's press secretary Dana Perino said. But "we believe this assistance should come from the program created by
Democratic leaders would need at least 10 Republican votes to pass the bailout in the Senate and overcome the minority's obstruction tactics with a 60-seat filibuster-proof majority. Perino pointed out that any attempt to reopen the the Troubled Asset Relief Program, as the bailout is known, would not make it through the Senate, and said the White House was working with Senate Republican minority leader Mitch
McConnell on the issue.
A credit crunch has made it impossible for the automakers to borrow money privately and US auto sales, which last month hit a 25-year low, are expected to sink to between 10 and 13 million vehicles next year from recent averages of 15 to 17 million.
|[an error occurred while processing this directive]|
|Privacy Statement Conditions of Access Advertise|