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Automakers Likely To Get $15B Bailout


From the studios of NPR West, this is Day to Day. I'm Madeleine Brand.


And I'm Alex Cohen. Coming up, Illinois Governor Rod Blagojevich is accused of selling President-elect Barack Obama's Senate seat to the highest bidder. Federal investigators have taken him into custody.

BRAND: First though, negotiators from Congress and the White House are still working on the details of an auto industry bailout.

COHEN: The short-term plan would give automakers access to $15 billion in emergency loans. General Motors and Chrysler say they need money now to make it through the holidays. NPR's David Welna is watching developments on Capitol Hill, and he joins us now. David, tell us what is in the draft bill that Congress has sent to the White House?

DAVID WELNA: Well, Alex, as you've mentioned, there's a money. It's what's often called a bridge loan. It's essentially the money that both Chrysler and GM say that they need to get by for the next two months. Ford, interestingly, is not seeking any of the $15 billion for now, at least. They say that they're healthier than the other companies.

This money is coming from funds that Congress had earmarked earlier this year for greening the U.S. auto industry, to help them retool and make more fuel-efficient cars, and it's not clear whether those funds are going to be replenished or how.

Also, there are restrictions on the car companies. They won't be able to keep their corporate jets. Bonuses are banned for the 25 highest-paid employees. The firms will have to drop lawsuits that they brought against states that have passed tough greenhouse-gas-emission laws, and this is all aimed at getting a long-term viability plan from the carmakers by March 31st.

House Financial Services Chairman Barney Frank, when he unveiled the details of this bill, made clear that many of its provisions were crafted to get buy-in from the White House.

Representative BARNEY FRANK (Democrat, Massachusetts): We have been able to send them a bill that we believe, as we understand the conversations, meets what they think is necessary, so that if there is a real desire to get this thing done and prevent adding another disaster to our economic situation, we should have it. There are a couple of specific issues to be negotiated. I think they can be worked out.

COHEN: David, how has President Bush reacted to this plan?

WELNA: Well, you know, he got one big item that he wanted, which was to have the funds come from the money that's earmarked for retooling the auto industry. But the White House has made it clear also that it opposes that possible requirement that Washington approve all transactions over $25 million, and it's also opposed to making the car companies drop their lawsuits against the states that have passed tougher greenhouse-gas laws. So, it's not jumping up and down about this.

COHEN: There's been a lot of talk about a so-called car czar who would oversee the car industry. What powers would this person have?

WELNA: Well, this would be someone who would be appointed by President Bush, who would see that the car industry is sticking to the terms of the agreement, and if they don't, they'd have to repay this seven-year loan early. The car czar would also likely try to get all the parties involved - the management, union, the shareholders, the creditors - get all of them together and have them take a haircut. That's the term that House Speaker Nancy Pelosi use to describe the sacrifice that each player is going to have to make under this deal.

House Speaker NANCY PELOSI (Democrat, California): We want to recognize the importance of the automotive industry to our country. Its survival is important to our economy. If they cannot survive, then we have to make an evaluation of the leadership of that industry as well because we will not give up on our automotive industry.

COHEN: Finally, David, will Republicans go along with this plan?

WELNA: Well, you know, it's not looking good for this getting enough votes in the Senate to move forward, at least as it's drafted right now. It only takes 41 senators to hold things up, and Senate GOP Leader Mitch McConnell today essentially rejected the bailout bill drafted by Democrats.

He said it's really just subsidizing the problem rather than solving it, and he noted that it does not address some of the most vexing issues for Detroit, especially the costly retirement plans. And polls show that Americans oppose this as well, and I think Republicans want to be on that side of public opinion. So, it may take further tinkering if this bill's to move forward.

COHEN: NPR's David Welna. Thank you.

WELNA: You're welcome, Alex. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Alex Cohen is the reporter for NPR's fastest-growing daily news program, Day to Day where she has covered everything from homicides in New Orleans to the controversies swirling around the frosty dessert known as Pinkberry.
David Welna
David Welna is NPR's national security correspondent.
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