WASHINGTON – Congressional Democrats and the White House on Monday settled on a plan to rush $15 billion in emergency loans to the cash-strapped Detroit automakers and were working into the night to resolve final disputes over the conditions the government should attach to the money.
Under the plan, unveiled by Democratic leaders, the Treasury Department would cut checks for the car companies as soon as next week. The proposal also calls for President Bush to name a “car czar” to manage a vast restructuring of the firms and restore them to profitability.
Democrats bent to the will of the president on several key demands, most notably in agreeing that the emergency funding would be drawn from an existing loan program aimed at promoting fuel-efficient technologies.
Still, the White House objected Monday to several elements of the Democratic proposal, congressional aides said, including requirements that the car companies notify Washington of any transaction of more than $25 million and that they pull out of lawsuits against states seeking to enforce tougher tailpipe-emissions standards.
Under the proposal, the car companies would be required to submit detailed plans for restructuring by March 31, when they would be eligible for additional government assistance. The Bush administration was pressing to strengthen those provisions to make clear that only companies that were either financially viable or taking steps to achieve viability could receive more federal cash.
In a statement, White House press secretary Dana Perino said that the two sides had “made a lot of progress in recent days” and that discussions were continuing over how to “help automakers restructure and achieve long-term viability.”
Appearing briefly before reporters, House Speaker Nancy Pelosi, D-Calif., said Democrats, too, are determined to force changes in the domestic auto industry, which had been losing customers to more nimble foreign competitors even before a deepening recession slashed demand for new cars to the lowest level in 25 years.
“Come March 31, it is our hope that there will be a viable automotive industry in our country with transparency and accountability to the taxpayer. We think that is possible,” Pelosi said, adding that auto company executives, their employees, their shareholders and their network of local dealers all will be expected to make concessions.
Talks continued late Monday in Pelosi’s Capitol Hill offices. Despite the administration’s last-minute objections, both sides remained optimistic that a deal could be finalized and quickly presented to lawmakers for a vote.
“It is overwhelmingly likely that a bill will be on the president’s desk by the end of the week,” said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, whose staff was taking the lead in drafting the measure.
Along with aides to Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, Frank’s staff worked until 2 a.m. Monday to prepare a “discussion draft” that was transmitted to the White House Monday afternoon. Under the proposal, General Motors, Chrysler and Ford are eligible to apply for emergency bridge loans that would be expected to keep them afloat through March.
The companies have asked for as much as $38 billion in government assistance. GM executives have said they could run out of money before the end of the month. To make it through March, GM has said, it would need as much as $10 billion in federal aid. Chrysler has said it would need about $4 billion.
Ford has requested access to a federal line of credit but has said it would not need to tap that fund unless the economy deteriorates dramatically. In a statement Monday, Ford said, “We do not face a near-term liquidity issue, and we will not be seeking a short-term bridge loan.”
Democrats had hoped to take the money from the Treasury’s $700 billion financial rescue program, but the White House objected. A breakthrough came Friday, when Pelosi dropped her opposition to tapping the loan program established by Congress this fall to help the automakers retool factories to produce more-fuel-efficient vehicles.
The Democratic proposal makes no provisions to replenish the loan fund, as Pelosi had hoped. But aides predicted that she would have little trouble adding the cash to a massive economic stimulus package President-elect Barack Obama has vowed to sign soon after he takes office in January.
In exchange for the money, the car companies would be barred from paying dividends to their shareholders or bonuses to their executives as long as the loans are outstanding. They would have to give taxpayers warrants to buy their stock, and submit to an audit by the Government Accountability Office and the special inspector general for the Treasury’s financial bailout program.
The measure also would require them to get rid of corporate jets, which ferried top executives to Washington to make an initial request for cash.
It was unclear how quickly a measure could be brought to a vote if a deal is finalized. Senate leaders have said they could hold a vote as soon as today, but such speed would depend on an agreement from Senate Republicans not to block the measure. Senate Minority Leader Mitch McConnell, R-Ky., has yet to make that commitment.
Most Americans oppose a bailout for the auto industry, putting Congress, the White House and Obama on the opposite side of public opinion. In a new Washington Post-ABC News poll, 54 percent of those surveyed said they oppose giving the companies up to $34 billion, while 37 percent supported the idea. Support was highest in the Midwest, home to much of the automakers’ manufacturing base, where the bailout drew 44 percent support.