Plan would grant government right to acquire preferred shares
The White House and Democrats in Congress were edging closer to a deal on Tuesday on rescuing the United States' struggling auto industry, with negotiators trying to agree on the wording of a $15 billion bailout bill.
“It's not buttoned down yet, we're still working through a number of issues. Discussions will continue this morning," a senior administration official said. A senior Democratic aide agreed that the two sides were "not too far apart" on a deal, which Democrats still hope to pass in Congress this week.
The aide said that Democratic leaders made a counter offer to the White House late on Monday after learning of administration concerns over whether the first draft of the loan package would actually make the "Big Three" Detroit automakers viable.
“We are trying to wrap this up and hope to have an agreement in the next few hours,” the Democratic aide said.
The two sides have been in talks for several days to finalize an emergency loan package to prevent the collapse of General Motors Corp and Chrysler LLC. Longer-term help also could be on the way if certain conditions were met.
The plan would grant the government the right to acquire preferred shares, or the economic equivalent, equal to 20 percent of the amount loaned.
Ford Motor Co is asking for a line of credit.
The US economy hemorrhaged more than 530,000 jobs during November, further increasing the urgency for help to stop the collapse of GM and Chrysler and save more than 350,000 industry jobs and millions of others that depend on the industry.
President George W. Bush has voiced concern about the automotive industry's ability to survive even if given an infusion of federal cash. The administration has maintained that any plan must include best efforts to guarantee taxpayer dollars are paid back and that the automakers are able to reorganize and compete.
In return for aid, lawmakers have requested a serious commitment from automakers to change the way they do business. GM, Ford and Chrysler submitted business plans to Congress last week with a $34 billion bailout request.
The latest draft of a deal would release loans later this month while establishing a "car czar" appointed by the president to ensure compliance by the automakers.
House of Representatives Speaker Nancy Pelosi told U.S. television network NBC in an interview aired on Tuesday that the car czar could be appointed as soon as this week if Congress approved the bailout bill.
She said she favored former Federal Reserve Chairman Paul Volcker to oversee the restructuring of the automakers, although he already has his hands full as President-elect Barack Obama's top adviser on steering the economy out of recession.
The bailout bill stipulates that no bonuses or “golden parachutes” are to be paid for top executives, while the ‘Big Three’ would have to sell their company planes.
The proposal also sets a March 31 deadline for the companies receiving loans to submit detailed plans of how they intend to cut costs and further overhaul their businesses.
The time frame means any long-term restructuring would occur under Obama who takes office on January 20 and is believed to be more sympathetic than the Bush administration to problems affecting US automakers.
