Obama, Congress proceed with caution

Automakers extend hand

By David R. Sands (Contact) and Jon Ward (Contact) | Wednesday, December 3, 2008

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President-elect Barack Obama and congressional leaders were taking a wait-and-see attitude Wednesday as the nation's Big Three carmakers prepared to make a critical pitch for tens of billions of dollars in federal aid.

Mr. Obama, addressing reporters in Chicago, offered qualified praise for the rescue plans submitted to Congress Tuesday by the heads of General Motors Corp., Ford Motor Co. and Chrysler LLC, which asked in total for as much as $34 billion in taxpayer-financed loans and credit lines.

"It appears, based on reports that we've seen, that this time now the executives from these automakers are putting forward a more serious set of plans" than the vague blueprints the Big Three presented to Congress in mid-November, Mr. Obama said.

But the president-elect said he would monitor hearings before the Senate Banking Committee Thursday and the House Financial Services Committee Friday before passing judgment on a bailout deal.

The carmakers say they have been blindsided by a global credit crunch and recession that has caused sales to plummet. Skeptics counter that the industry's wounds are largely self-inflicted, the product of years of bad design, engineering, marketing and financial decisions.

General Motors, in its submission to Congress, said it needed $4 billion in loans by the end of the month just to stay in business. Even Ford, the healthiest of the three U.S. auto giants, warned that the failure of one of its U.S. rivals could drag it down as well.

The White House also expressed some openness to the automakers' proposal, but also pointedly did not go so far as House Speaker Nancy Pelosi's statement Tuesday that bankruptcy for any of the three leading U.S. carmakers is "not an option."

"We don't want anybody to be negatively affected by a bankruptcy but sometimes companies do fail. That's just the way it is in our system," said White House press secretary Dana Perino.

Mrs. Pelosi and Senate Majority Leader Harry Reid, Neveda Democrat, say they are prepared to call Congress back to another lame-duck session next week if the auto makers can make a persuasive case for aid.

Mrs. Perino said that White House officials were "poring over" the automakers' proposal, and that the key to the administration is whether or not they think the plan will launch the companies toward viability.

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