Democratic leaders have ordered the Big Three US automakers to submit a detailed application for a $25bn bailout.
US automakers told to make bailout case
Democratic leaders have ordered the United States' Big Three automakers to submit what amounts to a detailed loan application to Congress so lawmakers can decide whether to give the beleaguered industry an emergency $25 billion (91.83bn) lifeline. In a letter to the auto executives released Friday afternoon speaker Nancy Pelosi and senate majority leader Harry Reid demanded a detailed accounting by Dec 2 of the companies' financial condition and short-term cash needs, as well as how they would achieve long-term viability.
"The auto companies' shareholders, business partners, and prospective benefactors - the American people - deserve to see a plan that is accountable to taxpayers and that is viable for the long-term," Mrs Pelosi and Mr Reid wrote. The Democrats also told the automakers to show how they would ensure that the government would be reimbursed and share in future profits, eliminate dividends and lavish executive pay packages, meet fuel-efficiency standards and deal with their health care and pension obligations to workers if they received the federal help.
The Bush administration sharply criticised the Democrats for leaving Washington for a congressional break time without acting on a rescue for the car makers. "How could they leave town when the auto companies were just here (this) week saying some of them were on the verge of running out of cash?," Commerce Secretary Carlos Gutierrez said in an interview. "I think it's a very irresponsible attitude toward a very serious matter."
Hearings are expected the week after next and lawmakers could consider legislation during the week of Dec 8, but only if the industry should show that taxpayers and autoworkers would be protected, congressional leaders said. Automakers have promised to submit the blueprint Democrats have demanded. GM spokesman Greg Martin said they would meet Congress' deadline and were "ready to work through their concerns and to deliver the accountability the taxpayers deserve before committing support to the domestic auto industry."
US automakers are struggling to stay afloat heading into 2009 amid an economic meltdown, a precipitous drop in sales and a tight credit market. The three companies burnt through nearly $18bn in cash reserves during the last quarter and GM and Chrysler have said they could collapse in weeks. Detroit's car makers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars. If just one of the automakers should declare bankruptcy, some estimates put US job losses next year as high as 2.5 million. Congress is weighing a tricky political question: Should it spend billions more on unpopular government bailouts or run the risk of bearing the blame of a US auto industry meltdown? * AP