White House pressured by lawmakers on auto bailout

[December 17, 2008]  WASHINGTON (AP) -- The Bush administration faces competing pressures from lawmakers in different congressional factions as it reviews its options for bailing out the downtrodden U.S. auto industry.

Conservative Republicans implored the White House not to use money from the $700 billion bailout for the financial sector to aid carmakers. A leading House Democrat, meanwhile, said the government should secure veto power over the companies' business decisions as part of any aid.

Bush administration officials said they were still evaluating options and attempting to avoid a disorderly bankruptcy of the companies while suggesting that concessions from all sides would need to accompany any deal.

"We're trying to do something that's responsible," said White House press secretary Dana Perino.

But a week after Congress failed to reach consensus on a $14 billion aid package for struggling General Motors Corp. and Chrysler LLC, several lawmakers pressed for an array of terms and conditions in any deal crafted by the White House, complicating matters.

Conservative lawmakers, many from Southern states that are home to Japanese auto plants, asked Bush not to use the $700 billion Wall Street rescue fund, known as the Troubled Asset Relief Program, to help the U.S. carmakers.

"Congress never voted for a federal bailout of the automobile industry, and the only way for TARP funds to be diverted to domestic automakers is with explicit congressional approval," wrote 26 GOP lawmakers, led by Rep. Jeb Hensarling of Texas.

Seven Senate Republicans led by Sen. Jim DeMint of South Carolina sent a similar letter saying that without restructuring, "we do not believe any amount of money will succeed in saving these companies."

Rep. Barney Frank, D-Mass., urged Treasury Secretary Henry Paulson to adopt the accountability provisions included in a House-passed auto bailout bill -- the product of a deal with the White House -- as a condition of any bridge loans to automakers.

The measure would have given a Bush-appointed "car czar" oversight over any major business decisions by the automakers while they were taking advantage of federal aid, including the power to veto any transaction of $100 million or more.

"Given the serious mistakes that senior auto industry executives acknowledge they have made in the past, such safeguards are absolutely necessary to ensure that taxpayers are protected and that the retooling of this critical industry proceeds as quickly as possible," Frank wrote.

The White House and Treasury Department were in talks with Sen. Bob Corker, R-Tenn., who has been seeking big union concessions in exchange for rescue money, on the terms and structure of a possible bailout, said a senior GOP congressional aide.

Corker came close last week to striking a deal with the United Auto Workers union for a $14 billion bill that would have forced the carmakers to bring their wages and benefits in line with those of Japanese auto companies in the U.S. by a specific date in 2009. The measure collapsed after the UAW refused to agree to wage cuts that quickly as Senate Republicans demanded. The new contacts with the administration were disclosed on condition of anonymity because the congressional aide was not authorized to divulge them.

GM and Chrysler have said they will run out of cash within weeks if they don't get help. Ford Motor Co. has said it has enough cash to survive 2009.

Perino said the administration was still working on details of the package, which could reach $15 billion for General Motors Corp. and Chrysler LLC. She said concessions had to be made in exchange for the money.

"I don't think that there's any possible way that this president would agree to allow taxpayer financing to go toward firms that are not willing to make tough decisions to become viable and competitive in the future," she said.

Bush said Tuesday that his administration was "considering all options" for helping the automakers. He said the already distressed economy could slide further into recession without prompt action.

"What you don't want to do is spend a lot of taxpayers' money and then have the same old stuff happen again and again and again," Bush told CNN. At the same time, he said, "we're trying to get this done in an expeditious way."

Options under consideration by the Bush administration include using part of the $700 billion fund to provide loans to the carmakers or using money from the fund as collateral for emergency loans to the automakers by the Federal Reserve.

[Associated Press]

Associated Press writers Julie Hirschfeld Davis and Ken Thomas contributed to this report.

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