Lawmakers to grill U.S. automakers on bailout request

By John Crawley and Kevin Drawbaugh

WASHINGTON (Reuters) - Lawmakers plan to question chief executives of stricken U.S. automakers on their pleas for an industry bailout, while the Bush administration responded coolly on Wednesday to an aid plan being shaped by Democrats.

Administration officials and some lawmakers expressed concern about industry viability, considering the automakers are churning through cash and have a poor near-term outlook. One Democrat, New York Sen. Charles Schumer, wants assurances Detroit will not seek yet more money in six months.

Rep. Barney Frank, chairman of the House of Representatives Financial Services Committee, said he would hold a hearing November 19 on legislation to extend up to $25 billion to General Motors Corp, Ford Motor Co, and Chrysler LLC.

The domestic auto giants have sought emergency assistance to help them survive a steep and worsening drop in auto sales that they blame on the global credit crisis and slumping economy.

GM has said it could run out of cash by early next year.

Frank's committee expects to hear from CEOs Rick Wagoner of GM, Alan Mulally of Ford and Bob Nardelli of Chrysler.

United Auto Workers President Ron Gettelfinger will also testify before Frank's panel next week, a union official said.

The four men lobbied House and Senate Democratic leaders last week on the need for a rescue.

GM U.S. sales chief Mark LaNeve told dealers in a letter obtained by Reuters on Wednesday that the cost of allowing an industry collapse would be "catastrophic" in job losses, personal income reduction and reduced tax revenues.

"This level of economic devastation far exceeds the $25 billion of government support that our industry needs to bridge this current period," LaNeve said.

GM appealed to dealers and employees to lobby for help.

Auto companies employee nearly 250,000 people in the United States and account for four million more jobs in related industries and indirectly.

With potential bailout cash on the horizon, investors sent Ford shares 2.2 percent higher to $1.84 on Wednesday, while GM jumped 5.5 percent to $3.08. Both trade on New York Stock Exchange. Chrysler is privately held by Cerberus Capital Management LP.

House Speaker Nancy Pelosi directed Frank on Tuesday to draft legislation to help Detroit via the U.S. Treasury Department's $700 billion corporate bailout fund.

Pelosi said Frank should include restrictions on executive compensation and add other "taxpayer protections." Key Democrats are also pressing for the government to take an equity stake in the industry in exchange for aid.