By Mark Huffman
ConsumerAffairs.com
November 20, 2008
The Big Three U.S. automakers, who went hat-in-hand to Congress this
week for a bailout, won't get it -- at least not right away.
Democratic Congressional leaders, who earlier voiced strong support for keeping General Motors out of bankruptcy, appeared at an afternoon news conference to say they were postponing any action on the carmakers' pleas.
"The executives of the auto industry have not been able to convince the American people or the Congress that this bailout would be their last," said Senate Majority Leader Harry Reid (D-NV).
Both Reid and House Speaker Nancy Pelosi said Congress wants to see a business plan from GM, Ford and Chrysler, showing how they would use taxpayer money.
"Until they show us the plan, we cannot show them the money," Pelosi said.
Democrats, with the support of the United Auto Workers Union, have generally favored government action to prevent GM, and others, from falling into Chapter 11 bankruptcy. While some business analysts say a structured bankruptcy might be the best way to reorganize GM and improve its long term prospects for survival, such protection would enable it to alter current labor and supplier contracts, as well as reduce current obligations.
The Bush Administration has opposed a federal bailout for the auto industry, but has said it has no objection to using $25 billion already appropriated to help carmakers retool for fuel efficiency, if the industry needs a bridge loan.
Worried about collateral economic damage from a carmaker bankruptcy, a bipartisan group of lawmakers from auto industry states worked out a compromise to use money from that fund. However, it's not clear whether there's enough support on Capitol Hill to pass it. Even so, Congressional leaders said they would revisit the issue in December.
