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White House, Democratic leaders reach deal on auto bailout - Dec. 10, 2008
Deal on $14 billion auto bailout
White House, congressional Democrats reach agreement on stopgap rescue plan. Quick House vote possible but Senate foes dig in.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: December 10, 2008: 1:52 PM ET
Another roadblock for GM
NEW YORK (CNNMoney.com) -- The White House and leading congressional Democrats have reached an agreement on legislation to provide a stopgap bailout to U.S. automakers, according to officials from the administration and Congress.
The next steps were not clear early Wednesday afternoon. A House vote could take place later Wednesday. But strong Republican opposition in the Senate made prospects there less certain.
The bill could provide the $14 billion that General Motors (GM, Fortune 500) and Chrysler LLC need to avoid filing for bankruptcy, allowing them to continue operations through the end of March.
The $14 billion is $1 billion less than what was being discussed earlier in the week, and less than half the $34 billion requested by automakers last week. Still it may well be enough to stave off the immediate threat of bankruptcy.
GM has said it needs $4 billion by the end of the month to avoid continue to operate, and believes it'll need an additional $6 billion in the first three months of 2009. Chrysler has said it needs $4 billion by the end of the first quarter.
Ford Motor (F, Fortune 500), which has more cash on hand than its U.S. rivals, is not expected to tap into this bailout in the coming months.
What is in the bill
The stopgap measure is designed to let the new Congress and incoming administration of President-elect Barack Obama to craft a longer-term solution. It would also give the companies time to negotiate with creditors and the United Auto Workers union on additional concessions needed to stem their ongoing losses.
But the bill also sets strict oversight of the companies. There would be limits on executive pay, prohibitions for so-called golden parachutes and requirements that the automakers get rid of their corporate aircraft and not pay dividends while loans are outstanding.
The bill also provides for a presidential appointee, popularly referred to as a "car czar," to oversee the company's efforts to restructure their operations. If the car czar determines that the companies have not made progress on cutting costs, the loans would be recalled within 30 days.
While most House Republicans have been strongly opposed to the auto bailout from the beginning, multiple Republican aides say that the Michigan Republicans and others from the Midwest auto belt are expected to vote for the agreement. Such support would give House Democrats the votes needed to pass the bill.
The agreement came after Democrats dropped a provision in a previous draft of the bill that would have prohibited automakers from continuing their support of lawsuits against states with emission standards more stringent than current federal rules.
"We do not believe there was any chance the legislation would pass if that provision remained in," said White House Deputy Chief of Staff Joel Kaplan.
Still, some Senate Republicans have threatened a filibuster, which could delay and even potentially block a vote on the bill. Five Senate Republican critics of the measure vowed Wednesday to do what they could to defeat the measure.
"What I've seen thus far is a travesty," said Sen. Richard Shelby, R-Ala. "This is an installment on a huge bailout that will come later. This will not make Chrysler, General Motors or Ford competitive. This is only delaying their funeral."
He would not predict whether critics had enough votes to block passage. But he cautioned "I think we're going to have a lot more friends than you probably think."
Senate Majority Leader Harry Reid, D-Ariz., said "it appears unlikely" the Senate will vote Wednesday on the legislation, saying that Senate Republicans have told him they want to study it before deciding how to proceed.
White House Chief of Staff Josh Bolton attended a Senate GOP policy lunch in the Capitol Wednesday to try to persuade skeptical GOP senators to support the bill.
A GOP Senate aide emphasized how crucial the meeting was, since Republicans have not been involved in the negotiations and have to be convinced that the White House sufficiently represented their concerns and interests.
It is unlikely that the White House will be able to sway strong Republican foes, such as John Ensign of Nevada and Jim DeMint of South Carolina. The big question is whether the White House can convince enough Republicans to get 60 votes to overcome opposition among those GOP senators.
Meanwhile, Reid said if Senate Democrats and Republicans can not reach an agreement to cut through the procedural steps opponents of the bill are likely to require, the Senate won't have final passage until late Saturday night or Sunday.
Reid held out hope that an agreement will be reached to require a 60-vote threshold for the bill -- the same vote total needed to break a time-consuming filibuster -- but allow final passage by perhaps Friday.
CNN's Dana Bash, Ted Barrett and Deirdre Walsh contributed to this report.
First Published: December 10, 2008: 11:48 AM ET
I can go along with this, as the loan can be recalled if rules aren't followed and it limits executive pay.
Deal on $14 billion auto bailout
White House, congressional Democrats reach agreement on stopgap rescue plan. Quick House vote possible but Senate foes dig in.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: December 10, 2008: 1:52 PM ET
Another roadblock for GM
NEW YORK (CNNMoney.com) -- The White House and leading congressional Democrats have reached an agreement on legislation to provide a stopgap bailout to U.S. automakers, according to officials from the administration and Congress.
The next steps were not clear early Wednesday afternoon. A House vote could take place later Wednesday. But strong Republican opposition in the Senate made prospects there less certain.
The bill could provide the $14 billion that General Motors (GM, Fortune 500) and Chrysler LLC need to avoid filing for bankruptcy, allowing them to continue operations through the end of March.
The $14 billion is $1 billion less than what was being discussed earlier in the week, and less than half the $34 billion requested by automakers last week. Still it may well be enough to stave off the immediate threat of bankruptcy.
GM has said it needs $4 billion by the end of the month to avoid continue to operate, and believes it'll need an additional $6 billion in the first three months of 2009. Chrysler has said it needs $4 billion by the end of the first quarter.
Ford Motor (F, Fortune 500), which has more cash on hand than its U.S. rivals, is not expected to tap into this bailout in the coming months.
What is in the bill
The stopgap measure is designed to let the new Congress and incoming administration of President-elect Barack Obama to craft a longer-term solution. It would also give the companies time to negotiate with creditors and the United Auto Workers union on additional concessions needed to stem their ongoing losses.
But the bill also sets strict oversight of the companies. There would be limits on executive pay, prohibitions for so-called golden parachutes and requirements that the automakers get rid of their corporate aircraft and not pay dividends while loans are outstanding.
The bill also provides for a presidential appointee, popularly referred to as a "car czar," to oversee the company's efforts to restructure their operations. If the car czar determines that the companies have not made progress on cutting costs, the loans would be recalled within 30 days.
While most House Republicans have been strongly opposed to the auto bailout from the beginning, multiple Republican aides say that the Michigan Republicans and others from the Midwest auto belt are expected to vote for the agreement. Such support would give House Democrats the votes needed to pass the bill.
The agreement came after Democrats dropped a provision in a previous draft of the bill that would have prohibited automakers from continuing their support of lawsuits against states with emission standards more stringent than current federal rules.
"We do not believe there was any chance the legislation would pass if that provision remained in," said White House Deputy Chief of Staff Joel Kaplan.
Still, some Senate Republicans have threatened a filibuster, which could delay and even potentially block a vote on the bill. Five Senate Republican critics of the measure vowed Wednesday to do what they could to defeat the measure.
"What I've seen thus far is a travesty," said Sen. Richard Shelby, R-Ala. "This is an installment on a huge bailout that will come later. This will not make Chrysler, General Motors or Ford competitive. This is only delaying their funeral."
He would not predict whether critics had enough votes to block passage. But he cautioned "I think we're going to have a lot more friends than you probably think."
Senate Majority Leader Harry Reid, D-Ariz., said "it appears unlikely" the Senate will vote Wednesday on the legislation, saying that Senate Republicans have told him they want to study it before deciding how to proceed.
White House Chief of Staff Josh Bolton attended a Senate GOP policy lunch in the Capitol Wednesday to try to persuade skeptical GOP senators to support the bill.
A GOP Senate aide emphasized how crucial the meeting was, since Republicans have not been involved in the negotiations and have to be convinced that the White House sufficiently represented their concerns and interests.
It is unlikely that the White House will be able to sway strong Republican foes, such as John Ensign of Nevada and Jim DeMint of South Carolina. The big question is whether the White House can convince enough Republicans to get 60 votes to overcome opposition among those GOP senators.
Meanwhile, Reid said if Senate Democrats and Republicans can not reach an agreement to cut through the procedural steps opponents of the bill are likely to require, the Senate won't have final passage until late Saturday night or Sunday.
Reid held out hope that an agreement will be reached to require a 60-vote threshold for the bill -- the same vote total needed to break a time-consuming filibuster -- but allow final passage by perhaps Friday.
CNN's Dana Bash, Ted Barrett and Deirdre Walsh contributed to this report.
First Published: December 10, 2008: 11:48 AM ET
I can go along with this, as the loan can be recalled if rules aren't followed and it limits executive pay.