Lawmakers spar over bailout breakdown

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By David R. Sands

Senate Banking Committee Chairman Christopher Dodd Friday urged the White House to act immediately to free up billions of dollars to bail out Detroit's Big Three, a day after the Senate killed a rescue package for the beleaguered car companies.

"This crisis is cascading as we speak," the Connecticut Democrat said, citing reports from auto dealers in his home state who said banks were calling in loans and denying customers credit to buy cars.

"It is urgent that the White House at least make an announcement today" about aiding the auto makers, Mr. Dodd said in an interview with Bloomberg Television.

But Sen. Bob Corker, the Tennessee Republican who spearheaded the GOP's negotiating efforts on the auto bailout package, said the Bush administration would be "missing an unbelievable opportunity" if it failed to insist on major changes in the car giants' financing, management and labor structure as a condition for federal aid.

Reversing course, the White House said Friday it was considering using the $700 billion Wall Street bailout fund approved by Congress in early October to provide emergency loans to General Motors Corp., Ford Motor Co. and Chrysler LLC. Treasury Secretary Henry M. Paulson Jr. has long insisted the money was needed to address the general credit crisis.

GM and Chrysler executives told Congress last month they needed a combined $15 billion over the next two months just to remain solvent.

But a rushed effort in Congress to tap a separate $25 billion Department of Energy loan program failed late Thursday night, when Senate Democrats failed to break a Republican filibuster of the bill.

Mr. Corker put the blame for the breakdown on the United Auto Workers, saying Republican and Democratic negotiators had already agreed to a bailout plan that demanded major concessions from the companies' bondholders and creditors. He said no auto bailout plan would win Democratic approval without the blessing of the union.

The workers' union, he said, agreed to cuts in the health benefits program but balked at pledging by the end of 2009 to make its wages "competitive" with the more profitable U.S. operations of foreign auto companies such as Toyota and Nissan.

If they had agreed to set a firm date in 2009 on wages, Mr. Corker said, "I'm convinced [the bill] would have passed the Senate by 90 votes."

But Mr. Dodd said the Republican demands included changes in work rules, benefits and wages that would have been impossible for the union to institute in the time frame sought, particularly with a general recession underway. He noted that the House had already passed a bailout bill, the White House supported the effort and Senate Democrats were also on board.

Mr. Corker acknowledged that the administration has wide discretion on how it conditions the bailout money, and said it was possible the Big Three and the union could receive federal aid without any of the demands he had sought.

"But is that a better deal for the UAW?" he asked. "With the companies limping forward, continuing to close plants, lay people off and lose market share -- I don't think that's a good deal for the UAW, personally."

Sen. David Vitter, Louisiana Republican, said the union had balked at the Senate Republican plan knowing that Democrat Barack Obama will take over the White House in Janaury backed by larger Democratic majorities in both houses of Congress.

"The union just wants to get to a month from now," he said on CNBC, "when the whole political landscape changes up here."