US House lawmakers as early as on Wednesday are likely to approve a $15 billion automaker bailout plan that will run into Republican stalling tactics in the Senate and the opposition of at least one Democrat.
“It will pass the House, the question is will Senate Republicans block this,” said Representative Earl Pomeroy, a North Carolina Democrat.
In the Senate, the Democrats aren’t completely united. Democrat Max Baucus of Montana, the chairman of the Finance Committee, said he will oppose the legislation.
General Motors Corp fell 17 cents, or 3.6 per cent, to $4.53 at 12:31 pm in New York Stock Exchange composite trading. Ford Motor Co fell 16 cents, or 4.9 per cent, to $3.07.
Congressional Democrats and President George W Bush’s administration reached an agreement that calls for the appointment of a so-called car czar who could force GM and Chrysler LLC into Chapter 11 bankruptcy if the companies don’t come up with a restructuring plan by March 31.
GM and Chrysler have said they need at least $14 billion in combined aid to keep operating through March 31. Until late on Tuesday, talks stalled over disputes such as Democrats’ requirement that automakers receiving federal loans end lawsuits challenging state auto-emission rules. That provision was dropped.
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House legislation introduced today would give the car czar power to veto automaker expenditures over $100 million rather than the $25 million originally planned. It also would ban bonuses for 25 most highly paid employees at each company, according to a summary of the bill.
The bill would give the government “super seniority” for any bridge loans so that taxpayers would be paid back before any other lenders to the companies, according to the summary.
House Speaker Nancy Pelosi said she plans to have a vote today in the House, where Democrats have a large enough majority to make passage likely. In the Senate, Democrats have only 50 seats and 60 votes are required to overcome objections.
Several Republican senators, including Richard Shelby of Alabama and Jim DeMint of South Carolina, oppose the measure. Louisiana Republican Senator David Vitter said today that he will use every possible procedural tool to stop it.
Senate Majority Leader Harry Reid, a Nevada Democrat, said today that the Senate would hold a procedural vote December 12 and a final vote over the weekend if objections are raised to voting earlier. Reid said he’s “fairly confident” of getting support “from both sides of the aisle.”
Bush administration officials, including the president, are lobbying Republican lawmakers to back the plan, officials said. “A lot of people are making calls,” US Commerce Secretary Carlos Gutierrez said in an interview.
GM Chief Executive Officer Rick Wagoner and Chrysler CEO Robert Nardelli both testified last week they will accept strict oversight and operating restrictions to win government loans.
“We welcome that oversight,” GM North American President Troy Clarke said on Tuesday in a Bloomberg Television interview.
Michigan Senator Carl Levin said “personal involvement” will be needed from Bush and President-elect Barack Obama for the plan to win approval. An Obama spokeswoman had no comment late yesterday.
DeMint, a Republican of South Carolina, said on Tuesday that Senate Republicans have the 41 votes needed to force Democrats to allow amendments to the proposal.
The United Auto Workers “strongly supports” the compromise, union President Ron Gettelfinger said on Wednesday.
GM’s 81 per cent plunge this year before Wednesday made it the worst performer among the 30 companies on the Dow Jones Industrial Average. Ford shares tumbled 52 per cent this year through Tuesday. While the second-largest US automaker would be eligible to apply for the loans, it has said it doesn’t expect to.
Gutierrez said the auto czar who will be appointed by Bush should “transcend” the administration.
Gutierrez, speaking in a Bloomberg Television interview, said the czar must be “independent” and he ruled himself out of the role.