21 Nov 2008

Auto giants told to come up with recovery plan

8:40 pm on 21 November 2008

US politicians have told the crisis-hit "Big Three" carmakers to come up with their own viable recovery plan if they want a $US25 billion government rescue.

The leaders of both houses of Congress said Ford, General Motors and Chrysler had until 2 December to present a plan.

Their comments came after four senators - Republicans and Democrats - said they had agreed a bipartisan aid deal.

The White House said President George W Bush favoured their deal, which would have used an energy department loan.

"This is an agreement the president could support," said White House spokeswoman Dana Perino. "We encourage the Congress to pass it as soon as possible."

But House Speaker Nancy Pelosi said there would be no bail-out without a plan showing that the money would make the firms financially viable. "Until they show us the plan, we cannot show them the money," she said.

Harry Reid, the Senate majority leader, said that motor industry leaders needed "to get their act together".

"The executives of the auto industry have not been able to convince the American people or the Congress that this bail-out would be their last."

After the car industry executives return to Washington on 2 December, Congress could be reconvened the following week to vote on a bail-out bill.

But time is short: the car-makers have suffered a collapse in sales and General Motors says it will run out of money by early next year.

The chief executives of General Motors, Ford and Chrysler were lambasted for making the trip to Washington by private jet. The car firms say they risk collapse, which could lead to millions of Americans losing their jobs.

Earlier on Thursday, Democratic Senators Carl Levin and Debbie Stabenow, from Michigan, the heart of the US car industry, and Republicans Kit Bond of Missouri and George Voinovich of Ohio said they had a bipartisan deal, but this did not garner wider support.

Their deal called for using a $US25 billion energy department loan to the motor industry, which was originally designed to spur the development of fuel-efficient vehicles.

The idea was that as the industry recovered, it would replenish the fund and the money would be used for its original purpose. This was the approach favoured by the Bush administration.