Prospect for auto bailout dims

By John Crawley and Kevin Drawbaugh

WASHINGTON (Reuters) - Chances dimmed that a last-minute plan being crafted by Republican senators, with White House support, to provide $25 billion to bail out U.S. automakers would receive enough backing from Democrats to pass before the end of this week.

As the hours ticked down on this year's legislative session, Democratic leadership expressed deep skepticism the talks would lead to a compromise acceptable to all parties.

Congress has at most two days remaining in its post-election session. Without a deal in that time, any bailout is likely to have to wait until the new Obama administration takes over in January.

"I won't say it's completely over. I'm still having conversations with people. But it doesn't look good," Sen. Robert Bennett, a Utah Republican, said of chances lawmakers would strike a deal that could pass.

Failure to craft a deal carries the risk that one or more of the U.S. automakers -- General Motors Corp, Ford Motor Co or Chrysler LLC -- could be forced into bankruptcy.

Senate Minority Leader Mitch McConnell said in remarks on the Senate floor that the compromise "is the only proposal being considered" that has any chance of becoming law now.

The approach, spearheaded by Republicans Christopher Bond of Missouri and George Voinovich of Ohio, would amend a plan that extended $25 billion approved in September for helping Detroit retool factories and make more fuel-efficient cars.

A number of strings attached to the retooling money would have to be cut or reworked to make it available immediately for operational and other pressing needs.

"We've made great progress. We're down to wording challenges," Bond said in remarks on the Senate floor Wednesday night.

CEO HOT SEAT

The rush to reach a deal comes after U.S. auto executives spent their second straight day on Capitol Hill pleading for $25 billion in government aid.

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.

Congressional Democrats have proposed using money from the $700 billion bailout package for banks to aid the automakers, but the Bush administration -- with only weeks left before it cedes power to President-elect Barack Obama -- has expressed opposition.