Last week's bad news—Friday's report of an alarming 533,000 lost jobs in November—could translate into better news this week for Detroit's struggling Big Three automakers.
Amid complaints of "bailout fatigue" by some in Congress, there's new optimism about roughly $15 billion in federal loans being OK'd to see struggling carmakers through the first three months of 2009.
That's a smaller number than the $34 billion the carmakers were asking for, but Democrats in Congress sent the White House a counterproposal on Monday, after marathon weekend negotiations, and were waiting for a response, a spokesman for House Speaker Nancy Pelosi said.
In the Senate, Democratic Majority Leader Harry Reid opened a special session Monday afternoon saying, "While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done."
He heralded General Motors, Ford, and Chrysler as American icons but slammed them as teetering on the brink of collapse "due in no small part to their own ineptitude." The Senate leader did not put a number on the loan package, said to be in the $15 billion range.
It can take up to 60 votes to pass a measure in the Senate, and its arcane rules mean one senator's objections can sink a measure. "We hope to have the votes," said Jim Manley, a spokesman for Reid, who predicted senators will consider the bill by midweek.
Passage was by no means a sure thing. "A lot of people don't like this," one Democrat cautioned.
Reid, in his remarks, noted the stock market jumped 300 points Monday at word a Detroit rescue was coming. His GOP counterpart, Sen. Mitch McConnell of Kentucky, said Republicans will insist on help that is conditioned on auto industry reforms. "Troubled automakers cannot expect taxpayer help without a serious commitment to change their ways—permanently," McConnell said.
So, what kick-started the help?
The "game changer" was news that more than a half-million Americans lost jobs last month, one key lawmaker, Democratic Sen. Chris Dodd of Connecticut, told ABC's Good Morning America Monday. He chairs the Senate Banking Committee, which has been pivotal in drafting the bill.
"Doing nothing is not an alternative," Dodd said.
The same day the jobless report came out, Pelosi gave up her demand that the loan money not come out of a $25 billion loan package, approved earlier this year, that had been intended to help automakers retool to build energy-efficient cars.
Monday morning, White House spokeswoman Dana Perino said a deal between the Bush administration and Congress was "very likely" this week.
Pelosi later told reporters she was "very encouraged" about progress on what she dubbed a "barbershop bill." She said that meant "everyone's getting a haircut," in that management, bondholders, shareholders, labor, dealers, and suppliers all might have to take cuts as the industry tries to restructure.
A 31-page discussion draft of the bill indicates that the bridge loans under consideration come with many strings attached, such as taxpayer protections, government oversight, and audits. One provision calls for a presidential appointee—being dubbed the "car czar"—to receive by next March 31 a long-term restructuring plan from the automakers. "There is not going to be an endless flow of money to this industry," Pelosi warned.
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