Democrats demand Big 3 offer survival plan

By Kevin Drawbaugh and John Crawley

WASHINGTON (Reuters) - Democratic congressional leaders, seeking to salvage a bailout of the Big Three automakers, demanded executives provide a business survival plan in exchange for their support of up to $25 billion in loans.

The ultimatum came on Thursday after the Democratic leaders failed to persuade the White House and congressional Republicans to use part of a $700 billion financial rescue fund to prop up the auto industry.

Hanging in the balance is the future of General Motors, Ford Motor and Chrysler LLC, whose losses have mounted during a severe economic downturn that has prompted Americans to largely stop buying cars.

Shares of GM and Ford rebounded from multi-decade lows as the developments in Washington kept bailout hopes alive.

While many lawmakers are anxious to see the companies survive, Republicans have been more wary of whether the money would really help, and Democrats have been more inclined to be generous to the huge employers of unionized labor.

Democratic leaders acknowledged on Thursday a growing public resentment over government bailouts of U.S. business in slowing the automakers' demands, saying they will take a look after the auto industry provides a roadmap to its survival.

House of Representatives Speaker Nancy Pelosi, a California Democrat, and Senate Majority Leader Harry Reid, a Nevada Democrat, told a news conference that the automakers must develop a bailout proposal by December 2 and it would be considered during the week of December 8.

"Until we can see a plan where the auto industry is held accountable and a plan for viability on how they go into the future... we cannot show them the money," Pelosi said.

Said Reid: "We can only help if they (the automakers) are willing to help themselves."

Both General Motors and Ford pledged to cooperate.

Amid warnings that General Motors might be facing bankruptcy by the end of the year, a bipartisan group of U.S. senators sketched out a possible compromise.

The White House said President George W. Bush could support the proposal spearheaded by Sen. Carl Levin, a Michigan Democrat, and Sen. Christopher Bond, a Missouri Republican, to allow automakers and their suppliers to use $25 billion in Energy Department loans for greener cars to address their current crisis.

The senators attached a heavy Washington hand. They proposed letting the government veto any auto investments or asset sales over $25 million.

Keeping a low profile was President-elect Barack Obama, who earlier in the week said U.S. automakers needed a government rescue but the help should be conditioned on changes in the industry.

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