Accord reached on US auto bailout

Source: Agencies  |   2008-12-7  |     NEWSPAPER EDITION

CONGRESSIONAL Democrats and the White House have reached agreement on emergency aid for US car makers of between US$15 billion and US$17 billion, according to senior congressional aides.

The outline of the package was reached after auto executives pleaded with law makers for help and US data showed employers axed more than 533,000 jobs in November, the highest monthly job loss in 34 years.

"Congressional Democrats and the White House have reached an agreement," a senior congressional aide said on Friday.

Another source said negotiators had "agreed in principle to moving ahead but details have to be worked out." More talks on the aid were expected yesterday with Congressional votes on a bill next week.

The temporary funding amount is far less than the US$34 billion in loans requested by General Motors, Ford Motor, and Chrysler, but it would sustain them into next year.

Daniel Weiss, a senior fellow with the Center for American Progress, said he expected Democrat law makers to seek more money for car makers after Barack Obama is sworn in as president.

"A short-term loan agreement is like putting a Band-Aid on a hemorrhage and they will still have to try and save the patient in January," said Weiss.

The car makers say they need help to survive a sharp downturn in sales fueled by the credit crisis and recession.

At hearings last week, many law makers were skeptical of the companies' viability, arguing they had failed in the past to cut sufficient costs, ween themselves from making gas guzzlers and produce innovative cars consumers wanted to buy.

Earlier on Friday, US House of Representatives Speaker Nancy Pelosi dropped her insistence that aid come from the US$700 billion financial services bailout fund the Bush administration had refused to use for car makers. It will now come from an Energy Department loan fund.