Auto execs testify as legislators try for deal

By John Crawley and Kevin Drawbaugh

WASHINGTON (Reuters) - U.S. auto executives went to Capitol Hill for a second day on Wednesday to argue their case for $25 billion in aid as legislators proposed changes to help a bailout pass Congressional and White House muster.

The day's hearings, before the House Financial Services Committee, got off to a rousing start when panel Chairman Barney Frank asked how the government could justify a bailout for banks and insurers, but not the automakers.

"Frankly, there seems to me to be an inherent cultural bias," Frank said. "Aid to blue-collar employees is being judged by a standard different than white-collar employees."

The weakened economy and global credit crisis pushed the U.S. government into bailing out companies including insurer American International Group Inc, investment bank Bear Stearns, and mortgage companies Fannie Mae and Freddie Mac.

Despite pressure from many sides, the prospects of an automaker bailout getting done this week remain uncertain.

Congressional Democrats have proposed using money from the $700 billion bailout package for banks to aid the automakers, but the Bush administration has expressed opposition. In addition, other opponents of the bailout have argued that reorganization under bankruptcy would be the best solution to the carmakers' problems.

But legislators have started to talk about crafting some kind of deal.

Senate Republican leader Mitch McConnell said a compromise is the only way for legislation to become law. He proposed to tap $25 billion of auto retooling loans already approved by Congress but not yet disbursed by the Energy Department -- an approach supported by the White House.

White House spokeswoman Dana Perino said the administration remains opposed to giving automakers money from the $700 billion financial rescue package, as some Democrats have urged. "There's no appetite for that," she said.

WHEELIN' AND DEALIN'

Democratic Sen. Carl Levin of Michigan, meanwhile, urged the House committee not to let differing views about the source of U.S. automaker loans hold up the aid.

"Are we going to permit a difference over the source of these loans to destroy an opportunity to help an industry so essential to this country?" Levin asked.

Republican Ohio Sen. George Voinovich, whose state could be devastated by a collapse of the U.S. auto industry, said he hopes Congress can reach a deal by the end of Wednesday.

"We are having a lot of discussions with the Democrats," said Voinovich, noting a growing consensus "of getting something done so we don't lose General Motors."

Senate Majority Leader Harry Reid, a Democrat, also hopes the Senate can pass a bill this week.