"Car czar" proposed for any automaker bailout

By Thomas Ferraro and John Crawley

WASHINGTON (Reuters) - A government "car czar" would oversee any bailout of U.S. automakers under proposed terms being negotiated by the White House and Congress for extending up to $17 billion in emergency loans that mainly aim to spare General Motors Corp and Chrysler LLC from bankruptcy.

Congressional and other sources familiar with the plan for oversight by an official within the executive branch said on Saturday that conditions were not final as Democratic leaders and the White House tried to cut a deal.

White House spokeswoman Dana Perino told reporters the assistance would only be considered for companies "willing to make the difficult decisions across the scope of their businesses to be viable and competitive" and in cases where strong taxpayer protections could be guaranteed.

Reeling from a plunge in sales they blame largely on the credit crunch and recession, once-vaunted GM, Chrysler LLC and Ford Motor Co sought $34 billion from Congress this week to forestall possible collapse.

There is wide concern that insolvency at one of the big manufacturers would devastate the deeply interconnected industry, including suppliers and dealers.

"That's our view," GM Chief Executive Rick Wagoner told Congress on Friday at a hearing.

Perino added that discussions between the White House and leaders of both parties had been "constructive."

Senate Banking Committee Chairman Christopher Dodd of Connecticut and House Financial Services Chairman Barney Frank of Massachusetts took the lead in writing legislation for majority Democrats.

'CAR CZAR' PROPOSAL

One leadership aide said both sides favored creation of a "car czar" role within the executive branch to oversee funds and ensure conditions were met.

Congressional aides and other sources said negotiators and the White House were trading draft proposals, and planned to work through the weekend.

The details were to supplement a framework struck late on Friday on the amount of aid -- up to $17 billion -- and the source of funding, an Energy Department loan program approved in September to help automakers make more fuel-efficient cars. The bridge loans are designed to carry industry into spring.

The impetus for the bailout breakthrough was an unexpectedly sharp downturn in U.S. unemployment in November, which made lawmakers fear thousands of U.S. auto industry workers could soon be added to the jobless rolls. Employers slashed more than 533,000 jobs last month, the highest monthly decline in 34 years.

GM, Ford and Chrysler employ nearly 250,000 people and say millions of other jobs depend on their survival.

The Detroit Three are weighed down by overcapacity, high healthcare and retirement expenses and high operating costs, as well as eroding market share due to competition from healthier foreign rivals like Toyota Motor Corp.