General Motors Corp Chief Executive Rick Wagoner told lawmakers he would accept strict conditions for a US loan to stay afloat, including a promise to return the money and file for bankruptcy if his company doesn’t fulfil the terms.
Hurdles remain for a plan to keep GM and Chrysler LLC from running out of cash, as members of Congress and the Bush administration disagree on a funding source. Lawmakers are considering options such as providing automakers with enough aid to get them through next year’s first quarter on condition they make significant progress on restructuring their operations.
“We’ve got the makings of putting something together,” Senate Banking Chairman Christopher Dodd, a Connecticut Democrat, told reporters after a hearing by his committee yesterday in Washington. “We’ve got a working situation here, and I’m going to try to get it done.”
Wagoner, Chrysler’s Robert Nardelli and Ford Motor Co’s Alan Mulally will face US House members today as they renew their push for quick action. GM says it needs $8 billion while Chrysler is seeking $4 billion to keep from running out of cash by early next year.
Senator Bob Corker suggested giving GM $10 billion as long as bondholders settle for 30 cents on the dollar, workers accept wages similar to those of foreign automakers’ US employees, and half of GM’s scheduled health care payment is folded into the company as equity. If the automaker fails to take the steps by March 31, it would have to return the money and declare bankruptcy, he said.
“Would you take our money?” with those conditions, Corker, a Tennessee Republican, asked Wagoner on Thursday. “Yes I would,” Wagoner replied.
“A big stick by the government in this case could actually cause your company, for the first time in modern history, to have the tools and the levers to actually do the things that will make you strong for the future,” Corker added.
The comments were a shift for Corker, who last month told reporters he was “very skeptical” about an auto aid package and that it may be better for the companies to reorganise in bankruptcy.
Lawmakers have said they may schedule votes next week. Yesterday’s hearing “was very helpful,” said Jim Manley, spokesman for Senate Majority Leader Harry Reid, a Nevada Democrat. “Any help must be conditioned on specific requirements to ensure viability and strong oversight.”
Senator Thomas Carper, a Delaware Democrat, said he is considering legislation to require banks that benefited from the federal bailout programme to lend money to keep GM and Chrysler running. That would give time for Congress and President-elect Barack Obama to devise a longer-term solution, Carper said.
“The likelihood has improved” for getting something done, Carper told reporters.
Senator Charles Schumer, a New York Democrat, discussed the possibility of legislation that would give automakers “not a small sum” and have a designee of the president, probably the Treasury Secretary, bring the parties together and work out concessions that would allow the money to flow.
The three automakers together are asking for as much as $34 billion in federal aid. “I am sorry to be asking for this support,” Wagoner told reporters before Thursday’s hearing.
The companies’ leaders were trying to recover from their appearance before Congress two weeks ago when they were criticised for arriving in Washington in separate private jets to plead for funds. They left empty-handed.
Disagreement between House Speaker Nancy Pelosi and President George W Bush over the source of aid for US automakers remains an impediment to getting a deal done.
Pelosi, a California Democrat, wants to rescue the car companies by tapping a $700 billion bailout fund for the financial industry. Reid said December 3 that such a plan doesn’t have enough votes to pass. Bush and congressional Republicans are pushing to instead use $25 billion in Energy Department funds for the development of fuel-efficient vehicles.
