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Fate of auto giants hangs by thread
Washington (AFP) Dec 5, 2008 A key Democrat warned Friday of "disaster" if the Big Three US automakers go bust, but Congress and the White House were still at odds over a rescue plan after two days of pleading by industry bosses. Chiefs of Chrysler, Ford and General Motors lobbied for a 34-billion-dollar bailout for their iconic firms as Washington digested shock news that the US economy lost 533,000 jobs in November, deepening economic depression fears. President George W. Bush meanwhile demanded Congress act next week on the bailout, but did not offer a proposal to ease a row with Democrats on the source of the funding which could scupper the bailout proposals. Fresh warnings that GM may not last the month without emergency loans added urgency to the House of Representatives showdown. "A failure to some extent of three of our major domestic manufacturing entities would be a very serious problem in any case," said House Financial Services Committee chairman Barney Frank. "In the midst of the worst economic situation since the Great Depression, it would be an unmitigated disaster." Ford CEO Alan Mulally was asked whether the failure of one of the Big Three could result in the demise of its competitors. "If one of us goes in, it has the potential to take all of us in," he said. GM boss Rick Wagoner and Chrysler chief Robert Nardelli also renewed pleas for help before the House panel which they made in a six-hour Senate hearing on Thursday. Democrats want the White House to tap an already approved 700-billion-dollar finance industry bailout known as the Troubled Assets Relief Program (TARP) to rescue the firms. But the Bush administration insists the money should come from diverting 25 billion dollars in loans to the industry designed to spur development of fuel-efficient vehicles. Bush, who leaves office in 46 days, said at the White House that he was concerned about the viability of the car firms. "It is important that Congress act next week on this plan and it's important to make sure that taxpayers' money be paid back if any is given to the companies." Republican Thaddeus McCotter broached a compromise, which would take half of the requested 34 billion dollars from the financial bailout and half from the previous auto industry loan. He warned the failure of the auto firms could take out millions of jobs in related industries. "That is not a ripple effect, that is a tsunami effect in these critical times," McCotter said. Senate Majority leader Harry Reid and House speaker Nancy Pelosi wrote to Bush on Thursday night, asking him to change his mind on the use of the finance industry bailout. "Your decision to utilize the TARP funds, or to work with the Federal Reserve to make available assistance through its existing lending programs, or both, are essential to the Congress' ability to address this critical economic situation in a timely manner," they wrote. After Thursday's Senate Banking committee hearing Democratic Senator Chris Dodd said he would work to broker an 11th-hour deal. "Nothing concentrates the mind like a death sentence," Dodd said. Congressional sources said Friday the next steps were still unclear and it was not yet certain whether the Senate and the House would return next week to vote on a bailout, and how much support such a move would get. Some lawmakers say the cash-strapped firms should use bankruptcy protection to restructure, but executives say such a move would kill consumer confidence in their products. The bosses appeared at acrimonious hearings two weeks ago but were sent back to Detroit to retool their restructuring programs. The new plans include cuts in jobs and costs, the sale of subsidiaries, and the demise of unprofitable models. They also pledged to develop cars that run on new-generation fuels, and to submit their restructuring to a federal oversight board. United Auto Workers chief Ron Gettelfinger warned on Thursday that time was short. "I believe that we could lose GM by the end of the month," he said. GM Thursday requested a second four-billion-dollar loan by January in addition to an already requested immediate four-billion-dollar rescue payment. The firm wants a total of 12 billion dollars in short-term loans and a six-billion-dollar line of credit. Ford wants a nine-billion-dollar line of credit and Chrysler says it needs seven billion dollars by December 31. Related Links Car Technology at SpaceMart.com
German automakers denounce EU compromise on CO2 emissions
Frankfurt (AFP) Dec 2, 2008The German automobile federation VDA slammed on Tuesday an EU compromise on rules to cut CO2 emissions from new cars, saying it ignored the sector's current crisis. |
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