Sen. Chris Dodd, D-Conn., supports helping the auto industry, but not until there are more answers on how to do that.
There was a rocky confrontation Thursday between U.S. automakers and lawmakers. Car makers want an expanded $34 billion rescue package they say they need to survive. Congressional analysts said one bailout plan under consideration would fall short of what the carmakers want.
With time on the current Congress running out, opposition to the bailout appeared to be as strong as last week -- before Detroit's Big Three auto chiefs returned to Capitol Hill with more detailed plans on how they would spend the money.
Several lawmakers in both parties are pressing the automakers to consider a so-called "pre-packaged" bankruptcy in which they would negotiate with creditors in advance and downsize, then file for Chapter 11 protection in hopes of emerging quickly as stronger companies. The Big Three have publicly shunned the notion, saying it would kill sales by destroying customers' confidence -- but executives have indicated in recent days that it might ultimately be necessary.
The executives all agreed in Thursday's hearing that a multibillion-dollar bailout deal would include a supervisory government board that could order major restructuring of the companies if deemed necessary for survival -- similar to the results in many reorganizing efforts under bankruptcy law.
United Auto Worker union President Ron Gettelfinger, aligned with the industry in pressing for the aid, told senators at a Banking Committee hearing that any kind of bankruptcy, even a pre-packaged one, was not "a viable option." Gettelfinger said consumers would not buy autos from bankrupt companies, no matter the terms of the arrangement.
He also warned that in the absence of action by Congress: "I believe we could lose General Motors by the end of this month." He said the situation was dire and time was of the essence.
The Big Three CEOs told the senators they hoped to make amends for past blunders. "We made mistakes, which we're learning from," General Motors chief executive Rick Wagoner said. Ford CEO Alan Mulally also acknowledged big mistakes, saying his company's approach once was "You build it, they will come."
"We produced more vehicles than our customers wanted, then slashed prices," he said. But as a result of these past mistakes, "we are really focused," he said.
Congressional Democrats have urged the administration to tap into an already enacted $700 billion financial bailout program to help the auto industry. The Bush administration has said that it has no intention of doing so, and would prefer aid be taken from an earlier $25 billion program to help the industry retool its plants to make their vehicles more fuel-efficient.
But congressional budget analysts have privately told top Democrats that tapping that program wouldn't come close to covering the $34 billion that carmakers now say they need to survive.
It would yield only $10 billion to $15 billion in short-term loans, the analysts claimed, according to congressional officials who spoke on condition of anonymity because they were not authorized to disclose the analysis.
The Big Three executives made the trip from Detroit in new-model hybrid autos made by their respective companies, two weeks after a botched appeal for $25 billion in which they were chided for flying on private jets to beg for money.
Chrysler CEO Bob Nardelli promised that his company, recipient of a previous government-subsidized rescue loan in the 1970s that it repaid, would repay taxpayers by 2012 and would devote itself to manufacturing "fuel-efficient cars and trucks that people want to buy."
Sen. Richard Shelby of Alabama, the senior Republican on the panel, complained that the pricetag on the package had jumped since the trio last appeared just two weeks ago. He pressed the automakers to explain why, and to justify how such aid would not simply "prop up a failed business model for a few months ... and how are you going to pay it back to the taxpayers?"
Dodd, the banking committee chairman, said he supports helping the industry, but said that detailed plans submitted earlier this week on how the companies would use low-cost federal loans to reorganize still left a lot of questions unanswered.
But Dodd also said that doing nothing "plays Russian roulette with the entire economy of the United States."
Treasury Secretary Henry Paulson has said that the main $700 billion bailout program is intended only to be used for the financial industry.
Gene L. Dodaro, the top official at Congress' watchdog agency -- the Government Accountability Office -- agreed with Dodd that the $700 billion package set up in October "is worded broadly enough" to permit it to be tapped for the automakers.
Dodaro testified that the Federal Reserve also has the authority under existing law to make loans to the domestic auto industry if it so chooses.
Dodd said that both Paulson and Fed Chairman Ben Bernanke had been invited to testify at Thursday's hearing, but had declined.
Sen. Bob Corker, R-Tenn., suggested that Chrysler was trying to piggyback on the other two automakers, noting that GM and Ford were publicly held companies and "cannot access cash" whereas Chrysler now is a privately held company 80 percent owned by Cerberus Capital Management LP.
"Look, you guys are in asking us for public money today," he told Nardelli. Corker said Cerberus "has lots of cash" but appears "unwilling to invest that money in your company...I have a little trouble with that."
Nardelli said that Chrysler has left "somewhat hollowed out" as a result of its divorce in 2007 from the German company now known as Daimler AG. But he said that Cerberus was "more than willing to provide the security and the commitment that the taxpayer do recover from their investment in this company."
Earlier, Senate Majority Leader Harry Reid, D-Nev., said prospects for Congress to act this year seemed slim.
"I just don't think we have the votes to do that now," he told The Associated Press.
The Big Three are struggling to stay afloat during the longest economic downturn in at least a quarter century, a steep decline in sales and a tight credit market. The three burned through nearly $18 billion in cash reserves during the last quarter.
The bailout remains unpopular with the public. Sixty-one percent oppose providing the auto companies with billions in federal assistance, according to a CNN-Opinion Research Corp. poll released on Wednesday. Fifty-three percent said it would not help the country's economy.
