Democrats Attach Provisions to Auto Bill
Monday, November 17, 2008
A measure to speed $25 billion in emergency aid to the nation's automakers will include provisions designed to protect taxpayers, congressional Democrats said yesterday, including a ban on bonuses for employees who make more than $200,000 a year and a government oversight board with power to veto corporate decisions.
The bill, which is expected to be unveiled today on Capitol Hill, also would bar the automakers from paying dividends to shareholders for as long as the firms owe the government money, Rep. Barney Frank (D-Mass.) said on CBS's "Face the Nation" yesterday.
Despite strong opposition from congressional Republicans and President Bush, Democrats plan to press ahead with legislation aimed at staving off the collapse of the auto industry when Congress convenes this week for its final session of Bush's presidency.
While Frank presents his version of the bill in the House, Carl M. Levin (D-Mich.) is expected to present a similar bill in the Senate, where it will be paired with a $6 billion proposal to extend unemployment benefits for another 13 weeks. That measure is likely to face its first test vote on Wednesday.
Both measures would carve cash for Detroit out of the $700 billion financial rescue program Congress created last month to shore up the U.S. banking system. The White House opposes using the money for that purpose and has urged lawmakers instead to modify an existing $25 billion loan program to help the automakers retool factories to produce more fuel-efficient vehicles.
Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke plan to meet today with House Speaker Nancy Pelosi (D-Calif.) to discuss the Treasury program and the auto bailout, Pelosi's office said yesterday. But Frank and Levin said Democrats are dead-set against modifying the loan package, arguing that doing so would make it harder for the car companies to survive in the long term.
Passage of the auto bailout is particularly iffy in the Senate, where the measure will need 60 votes. Democrats hold 51 seats until new members take office in January, but they are losing President-elect Barack Obama, who resigned his Illinois seat yesterday.
Sen. Richard C. Shelby (R-Ala.), an influential voice among GOP senators on financial matters, opposes the bailout and said any government aid to the car companies should be accompanied by a demand that senior executives resign.
"The management has got to go," Shelby said on "Face the Nation." "If you deal with the people who brought the failure to these companies and keep them in office, keep them in power, with federal money, you're just going to have more of the same problem and nothing is going to happen, except just the downward spiral."
Frank and Levin have said they do not plan to seek removal of auto executives, but would make the car companies follow the same rules as the financial institutions that receive money under the Treasury program. The firms, for instance, would have to limit executive compensation and provide the government with warrants to buy stock, allowing taxpayers to benefit if the companies return to financial health.
Yesterday, Frank said he plans to go further in the auto bill, adding bans on dividends and bonuses for highly compensated employees. Frank said he also would create a "very tough oversight board that, among other things, could veto ventures that would take some of this money and maybe put it overseas."
That board would be composed of "the leading executive branch officials who have jurisdiction," Frank said, listing the secretaries of labor, commerce, energy and the environment.