U.S. seeks data from automakers for bailout review
WASHINGTON (Reuters) - Automakers must provide Congress with cash and sales data as well as current plans for making energy-efficient vehicles if they hope to receive a government bailout next month, lawmakers said on Friday.
Separately, Commerce Secretary Carlos Gutierrez told Reuters in an interview that the Bush administration would not offer emergency aid to General Motors Corp, Ford Motor Co or Chrysler LLC even if their problems worsen over the next few weeks, and with Congress now out of session.
House and Senate Democratic leaders, in a letter to GM, Ford and Chrysler executives, said the companies must submit a "credible restructuring plan" to demonstrate viability.
The proposals for aid are due December 2 and will be reviewed by the Banking and Financial Services committees, the Federal Reserve, the Government Accountability Office and relevant agencies, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in their letter.
Congress could reconvene the week of December 8 to consider a bailout, if leadership accepts the automakers' plans.
Pelosi said earlier in the day that lawmakers "don't have any intention of seeing the auto industry go down" but stressed that "what we do will be determined by what they do."
Pelosi said Detroit's top executives failed to convince Congress this week at two hearings that emergency aid was needed, especially since they arrived in Washington aboard private jets.
"CEOs getting off a corporate jet, rattling a tin cup is not a good image," Pelosi said in summing up the anecdote ringing loudly in the ears of Rick Wagoner of GM, Alan Mulally of Ford and Bob Nardelli of Chrysler when they left town.
Congress failed to act on two $25 billion bailout plans this week for several reasons, including a palpable aversion by enough lawmakers to underwriting another rescue that might be perceived as a "blank check" to corporate America.
Many lawmakers, especially Republicans, were stung by a voter backlash for supporting the $700 billion financial services rescue in October.
Currently, Democrats need Republican support to push anything through the Senate and be signed by President George W. Bush, who backs one of the $25 billion proposals that remains on the table.
Pelosi said the main reason for inaction was Detroit's inability to sell their plan in congressional testimony this week. Wagoner, Mulally, and Nardelli described a worsening liquidity crisis and warned of possible industry collapse without a bailout soon.
Democratic leaders demand the companies demonstrate financial viability and accountability. In their letter, they sought:
- Current operating cash position, short-term liquidity needs to continue operations as a going-concern, and how they will meet future financing needs.
- Provide estimated sales data -- including improvements and worst-case scenarios.
- Assurances that government receive warrants for stock or other instruments in return for taxpayer funds, and that the companies pay no dividends and impose limits on executive compensation.
- Proposals to address the payment of health care and pension obligations.
- Demonstrate an ability to meet a 40 percent increase in fuel efficiency standards by 2020 and show how the industry would lead in the production of energy-efficient vehicles.
One option Pelosi does not favor is bankruptcy, saying that would be "digging the hole far too deep." Some in Congress have raised the issue of pre-packaged bankruptcy as a route to quickly restructure.
Gutierrez, a former CEO of Michigan-based Kellogg Co, said the companies must decide on their own whether to pursue alternatives such as a possible merger of two of them, or a pre-packaged bankruptcy.
"That has to be their decision. I mean, that's not a government call. If that's the way that they believe they can get to viability, that's their call," he said.
(Editing by Matthew Lewis)
