(Recasts, adds Pelosi, senate comment)
By John Crawley
WASHINGTON, Sept 9 Congressional Democratic
leaders expressed the intent on Tuesday to make it possible for
beleaguered U.S.-based auto companies to access at least $25
billion in low interest loans, a priority for industry facing
tougher requirements for fuel efficient vehicles.
"It's very important to our country," House of
Representatives Speaker Nancy Pelosi told reporters about
credit assistance aimed mainly at helping General Motors Corp
(GM.N), Ford Motor Corp (F.N) and Chrysler LLC [CBS.UL] retool
factories and spark more investment in battery research.
Domestic manufacturers, whose core sport utility and truck
business has collapsed amid record high fuel prices and a
sluggish economy, lag behind Japanese and other overseas
competitors in making gasoline/electric hybrids and other fuel
efficient cars that consumers are now demanding.
Pelosi, a California Democrat, and her chief deputy,
Majority Leader Steny Hoyer of Maryland, could not say whether
funding legislation needed to trigger the loans could be
approved before Congress is scheduled to leave town at the end
of the month -- possibly for the rest of the year.
Senate allies of automakers also said the matter was being
discussed, but no decision has been made on how to get any
measure through that chamber with time working against them.
"It will certainly be part of something that is moving.
Given the three-week time frame its highly unlikely that it
will be a separate piece of legislation," said Sen. Debbie
Stabenow, a Michigan Democrat.
Sen. George Voinovich, an Ohio Republican, said lawmakers
are evaluating all aspects, but "it's all brand new."
The White House is watching the matter closely, but has
said little publicly. It has previously urged the auto industry
to shore up its own finances and has adamantly opposed any
While up to $25 billion in government-supported loans for
all automakers were included in the 2007 energy law signed by
President George W. Bush, the White House has always been
uncomfortable with any scenario that smacks of a bailout.
"Obviously when what is being proposed is taxpayer support
for private companies, that's not something that should be done
without serious deliberation of the consequences," a senior
administration official said.
Auto chief executives vehemently deny the loan program is a
bailout, instead characterizing it as a way for them to access
the massive financing needed to overhaul their businesses to
meet a government mandate for an overall 40 percent improvement
in fuel efficiency by 2020.
"We are in very good shape as far as liquidity," Ford chief
executive Alan Mulally said on Monday.
Credit downgrades have pushed borrowing costs sharply
higher for Ford, GM and Chrysler. Government-backed loans could
make it much cheaper for carmakers to finance their rapidly
To access government-backed loans, Congress must approve
money to cover debt risk. This is what auto industry supporters
in Congress are focusing on now.
For the full $25 billion in credit assistance available
under law today, the taxpayer hit would be roughly $3.8
billion. Automakers would like to double the amount of
available credit to $50 billion, which would raise the
congressional outlay to roughly $7 billion, Pelosi said.
However, gaining another $25 billion in help now would take
separate legislation at a time when the congressional calendar
is compressed and the agenda is heavy with other priorities.
Pelosi suggested the funding could be attached to pending
energy legislation or a separate spending bill that must pass
before the end of the fiscal year on Sept. 30. Or, she said,
loan funding could be placed in a second economic stimulus
package, but that may not materialize until the next
presidential administration in January.
Automakers prefer a quicker response
(Additional reporting by Jeremy Pelofsky and Donna Smith;
Editing by Andre Grenon)