Big Three CEOs grovel for bailout

UPDATED:

Chastened Big Three auto executives told Congress on Thursday that they are prepared to take painful steps to qualify for a $34 billion federal bailout to stave off insolvency, including a proposed shotgun merger of General Motors Corp. and Chrysler LLC.

Lawmakers are skeptical that Congress will pass a deal, and House Speaker Nancy Pelosi has said bankruptcy isn’t an option. So Democrats were looking for ways to force the Bush administration to act on its own to rescue the automakers.

Commerce Secretary Carlos Gutierrez said one option would be voluntary bankruptcy as a way to restructure debts, costs and business lines.

“The bankruptcy would need to be, for it to be carried out in a successful fashion, would need to be a decision made by the companies,” he told The Washington Times in an interview. “What we would not like to see is a disorderly bankruptcy, where it becomes a function of the companies having failed. We want these companies to succeed.”

Testifying before the Senate Banking, Housing and Urban Affairs Committee, GM Chairman and Chief Executive Officer Rick Wagoner, Ford Motor Co. chief Alan R. Mulally, Chrysler LLC Chairman and CEO Robert Nardelli and United Auto Workers President Ron Gettelfinger all rejected the idea of a bankruptcy reorganization, saying customers would instantly flee from any company that made such a filing.

But the executives said they would be willing to accept strict federal oversight of any bailout money, would pay back all federal loans and would agree to virtually any other conditions in exchange for the money.

Sen. Robert F. Bennett, Utah Republican, asked Mr. Nardelli whether Chrysler would agree to merge with GM - a step many private analysts say the overbuilt U.S. industry must take - as a condition for aid.

The Chrysler executive noted that he would be the first to lose his job in a merger, but said he would agree if Congress required it.

“If in fact that’s the criteria that means we get money to save Chrysler and the people who have worked there for 80-some years, I would do it,” Mr. Nardelli said.

Lawmakers have several options, including fully funding the auto industry request and providing a smaller “bridge loan” to tide over the companies until the Obama administration takes office.

Congressional Democrats and the White House are publicly feuding about where to get the money, and some in Congress are trying to make President Bush act.

“There is talk about ways to push it off on the president,” a House Democratic leadership aide said.

Banking committee Chairman Christopher J. Dodd, Connecticut Democrat, expressed frustration over the refusal of the Bush administration to tap the $700 billion financial industry bailout fund to help the car companies. He said he had invited Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke to testify but both declined.

Gene L. Dodaro, the government’s acting comptroller general, said Thursday that the Treasury and the Federal Reserve have authority under existing legislation to offer aid to the auto industry.

Story Continues →