Differences narrow on US$15b bailout for US car makers

Source: Agencies  |   2008-12-9  |     ONLINE EDITION

A FEDERAL "car czar" would oversee a government-run restructuring of United States auto companies in return for a US$15 billion bailout of the beleaguered industry under an emerging deal between the White House and Congress.

Negotiators worked through the night yesterday narrowing differences on a bill to rush short-term loans to the struggling Detroit carmakers through a plan that requires that the industry reinvent itself to survive -- and pay back the government if it does not. The package could come to a vote as early as Wednesday.

The measure would put a government overseer named by President George W. Bush in charge of setting guidelines for an industrywide overhaul, with the power to revoke the loans if the automakers fail to do what's necessary to become viable. The White House was seeking tougher consequences, including allowing the overseer -- being called a "car czar" -- to force the companies into bankruptcy if they were not doing enough to cut labor costs, restructure their debt and downsize to stay afloat.

Despite optimism on both sides that Congress and the White House could reach a swift agreement on the measure, it was still a tough sell on Capitol Hill. With lawmakers in both parties still bitter over the Bush administration's use of the US$700 billion Wall Street bailout, many of them were preparing to hold their noses and vote for yet another federal rescue to avert deeper economic disaster.

"While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done," Senate Majority Leader Harry Reid said. "This is no blank check or blind hope."

The developing plan would dole out auto industry loans right away, drawing the money from an existing program meant to help the carmakers retool their factories to produce more fuel-efficient vehicles. Then the czar would write guidelines, due on the first of the year, for restructuring the companies.