Big 3 Automakers Begging for $34 billion; Congress Eyeing $15 billion

The prospect of getting a bridge loan to survive is looking positive for Ford Motor Company, General Motors Corp. and Chrysler LLC, even through the government is proceeding with extreme caution.

Last Thursday and Friday automakers showed up on Capitol Hill again – this time in full efficient vehicles rather than corporate jets – to plead for as much as $34 billion in money to help keep their businesses from buckling by year’s end.

GM chief Rick Wagoner said in testimony, "We made mistakes, which we’re learning from."

Auto executives are desperate; thousands of jobs lay in the balance and Congress is still skeptical that the big three Detroit dealers, if given money, won’t come back later requesting more funds. (“Workers, Consumers to be Biggest Losers in Big Three Automakers’ Breakdown,” Nov. 21).

Since Thursday, automakers pleaded to the House Financial Services Committee to provide them with bridge loans totaling $34 billion to survive, as they provided plans that specified their intentions for the money.

Members of Congress are still split. Sen. Richard Shelby (R-Ala.) commented on the plans’ lack of seriousness and detail, saying, “If you made this presentation to get a bank loan, I suspect that any sensible banker would summarily reject your request.”

Senate Banking Committee Chairman Sen. Chris Dodd, (D-Conn.) said, “We need to act,” noting that letting the automakers fail would be like “playing Russian roulette with our entire economy.”

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Democratic Congressional leaders are leaning on President George W. Bush to tap into the already enacted $700 billion Wall Street bailout fund to aid the auto industry, arguing that a carmaker collapse would have a devastating impact on the financial firms the program is designed to help.

The Bush administration objects, saying that the money was supposed to be for financial institutions, and instead wants to convert $25 billion in previously-approved money designed to increase American car fuel-efficiency money into emergency loans.

United Auto Workers President Ron Gettelfinger also testified Thursday and Friday on behalf of car makers and dealerships.

In a press conference Gettelfinger said, “The real issue is the backbone of America — an industry that does more for the economy than any other industry and, quite frankly, made the middle class what it is today.”

The ultimate decision for bailing out the automakers has seemed to wind down to possibly including a Cabinet-level oversight board and a provision to withdraw the money if the overseers decide the companies are failing to take steps to overhaul themselves.

Monday, Democratic leadership hinted that a deal was close. The package would see $15 billion lent to the automakers by early next week. The money would come from the fund for fuel efficient vehicles.

Terms for the money will be similar to those placed on banks receiving money from the $700 billion bailout.

According to officials, the White House and Democratic congressional leaders are narrowing their differences over the auto bailout, but have yet to agree on specific legislative details.

In more bad news from the auto industry, Toyota announced last week a 34 percent drop in sales in November compared to 2007.