U.S. auto bailout on brink of collapse
Last Updated: Thursday, November 20, 2008 | 2:57 PM ET
The Associated Press
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The $25-billion US rescue plan for the auto industry, desperately sought by Detroit's beleaguered Big Three, further collapsed Thursday as the U.S. Congress drew the line at one more bailout and Democrats said they wouldn't even consider it until the companies produced a convincing plan for rebuilding their once-mighty industry.
The demise of the rescue — at least for now — left uncertain the fate of General Motors Corp., Ford Motor Co. and Chrysler LLC, and sent Wall Street spiralling to its lowest level in years. The Dow Jones industrials dropped 445 points, the second straight plunge of more than 400, and hit the lowest point in nearly six years.
"Until they show us the plan, we cannot show them the money," Speaker Nancy Pelosi, a Democrat from California, said at a hastily called news conference in the Capitol.
GM, Ford and Chrysler quickly issued statements promising to submit the blueprint the Democrats demanded.
Vote may be held in December
Pelosi and Senate Majority Leader Harry Reid, a Democrat from Nevada, said Congress might return to work in early December for a vote on aid to the carmakers — but only if the carmakers show Congress they could use the funds to transform their struggling industry into a viable one.
For now, however, the Democrats said the aid plan lacked the support to pass Congress and be signed by President George W. Bush.
Bush and congressional Republicans had balked at Democrats' suggestion to draw emergency auto industry loans from the $700-billion Wall Street rescue fund. And most Democrats were unwilling to go along with a separate, bipartisan effort backed by the White House to temporarily divert an existing program to help carmakers produce vehicles that burn less gasoline to cover the companies immediate financial needs.
But with GM warning it could go under before year's end, Democratic leaders were unwilling to close up shop for the year and appear to turn a deaf ear to the industry. They scheduled hearings the week of Dec. 2 on the automakers' viability plans and said a vote on a bailout could come the week of Dec. 8.
"Yes, we're kicking the can down the road, because that will give us the opportunity to do something positive," Reid said. "But that will only happen if they get their act together."
The White House criticized the delay, saying the plan to let the automakers tap the fuel-efficiency loans for their short-term cash needs should be considered.
"If there are lawmakers who want to help the automakers, and they have a path to do so, why are they going to kick the can down the road?" said Dana Perino, the White House press secretary.
The chief executives of the Big Three automakers appealed personally to lawmakers for the loans this week, but Pelosi said she had little patience left for excuses from the carmakers on why they haven't turned their businesses around.
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