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Democrats Unveil $15 Billion Emergency Loan for Big Three Automakers
Along with aides to Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, Frank's staff worked until 2 a.m. yesterday to prepare a "discussion draft" that was transmitted to the White House yesterday afternoon. Under the proposal, General Motors, Chrysler and Ford are eligible to apply for emergency bridge loans that would be expected to keep them afloat through March.
The companies have asked for as much as $38 billion in government assistance. GM executives have said they could run out of money before the end of the month. To make it through March, GM has said, it would need as much as $10 billion in federal aid. Chrysler has said it would need about $4 billion.
Ford has requested access to a federal line of credit but has said it would not need to tap that fund unless the economy deteriorates dramatically. In a statement yesterday, Ford said, "We do not face a near-term liquidity issue, and we will not be seeking a short term bridge loan."
Democrats had hoped to take the money from the Treasury's $700 billion financial rescue program, but the White House objected. A breakthrough came Friday, when Pelosi dropped her opposition to tapping the loan program established by Congress this fall to help the automakers retool factories to produce more-fuel-efficient vehicles.
The Democratic proposal makes no provisions to replenish the loan fund, as Pelosi had hoped. But aides predicted that she would have little trouble adding the cash to a massive economic stimulus package President-elect Barack Obama has vowed to sign soon after he takes office in January.
In exchange for the money, the car companies would be barred from paying dividends to their shareholders or bonuses to their executives as long as the loans are outstanding. They would have to give taxpayers warrants to buy their stock, and submit to an audit by the Government Accountability Office and the special inspector general for the Treasury's financial bailout program.
The measure also would require them to get rid of corporate jets, which ferried top executives to Washington to make an initial request for cash.
Democrats flirted with the idea of naming a seven-member board to oversee the auto bailout but decided instead to have the president name an individual, as Bush had suggested. Frank said that the car czar is likely to be a government official who could get to work quickly, rather than an outsider, and that Obama could replace Bush's appointee once he takes office.
It was unclear how quickly a measure could be brought to a vote if a deal is finalized. Senate leaders have said they could hold a vote as soon as today, but such speed would depend on an agreement from Senate Republicans not to block the measure. Senate Minority Leader Mitch McConnell (R-Ky.) has yet to make that commitment.
Most Americans oppose a bailout for the auto industry, putting Congress, the White House and Obama on the opposite side of public opinion. In a new Washington Post-ABC News poll, 54 percent of those surveyed said they oppose giving the companies up to $34 billion, while 37 percent supported the idea. Support was highest in the Midwest, home to much of the automakers' manufacturing base, where the bailout drew 44 percent support.
Meanwhile, the automakers waited anxiously for a resolution. Chrysler said it is looking "forward to working with Congress and this administration, and the next administration, and to completing our restructuring in an orderly fashion."
GM said in a statement: "The current set of extraordinary economic circumstances the industry faces requires equally extraordinary action now on both the part of the automakers and Congress."
Staff writers Dan Eggen and Kendra Marr and polling director Jon Cohen contributed to this report.