The White House voiced concern about a Democratic plan on Monday to bail out stricken automakers with up to $15-billion in loans and provide longer-term help if certain conditions were met.
President George Bush questioned the ability of the wounded automotive giants to survive, prompting a meeting between White House aides and Democratic staffers.
Democrats sought to address administration concerns in a counter-proposal, congressional aides said. Democrats said they remained confident a deal could be struck.
The White House wanted greater assurances that the automakers, in a long downward spiral, would be able to reorganise and compete.
The rescue aims to avert the threatened collapse of General Motors (GM) and Chrysler, saving more than 350 000 jobs and millions of others that depend on the industry.
”This is no blank cheque or blank hope,” Senate majority leader Harry Reid said as he reconvened the chamber.
GM, Ford and Chrysler submitted business plans to Congress last week along with a $34-billion bailout request.
The Bush administration hopes for a deal but insists that the companies be commercially viable.
”Viability means that all aspects of the companies need to be re-examined to make sure that they can survive in the long term,” Bush said in an interview with ABC News’ Nightline.
Both GM and Chrysler have requested billions by month’s end to replenish dwindling cash reserves.
The Dow Jones industrials rose 298 points partly on hopes of a bailout deal. Ford stock was up 24% to $3,38, while GM was 20% higher to $4,93.
The plan would release loans later this month but Democrats dropped the idea of creating a single oversight figure, or ”car czar”, to dictate company operations. The plan still calls for one or more officials to enforce compliance.
Also absent were any mandated changes in management, but GM chairperson and CEO Rick Wagoner is under pressure to quit.
Democrats have avoided putting GM or Chrysler on a path toward bankruptcy or a required out-of-court reorganisation. Still, GM seems headed for a wrenching restructuring.
House Speaker Nancy Pelosi said that to get federal money, management, labour, bondholders, dealers and other stakeholders will have to make serious concessions.
”Everyone’s taking a hair cut,” she said. — Reuters