Autos News

Senate plays role of Grinch for autoworkers

WASHINGTON (Reuters) - The U.S. Senate took on the role of Christmas Grinch for autoworkers when it failed on Thursday to pass a $14 billion rescue package for Detroit’s three major car manufacturers.

Attention now turns to the Bush administration’s Treasury Department, who Reid and other supporters of a bailout said should dip into the $700 billion fund Congress created to help Wall Street firms and banks, and lend automakers the money they need to avoid bankruptcy and save millions of jobs.

The Senate late on Thursday came only a few “yes” votes short of the 60 needed to block a filibuster on the bailout bill, effectively killing any chance of Congress providing a lifeline to the financially drowning automakers this year.

“It’s going to be a very, very bad Christmas for a lot of people based on what takes place here tonight,” Senate Majority Leader Harry Reid told his colleagues before the vote. “It’s over with.”

A Treasury Department official declined to comment on the Senate’s failure to approve the rescue package and said it was up to the White House to respond.

White House spokesman Tony Fratto said the administration would evaluate its options “in light of the breakdown in Congress,” saying the legislation had “presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable.”

Markets across the Asia-Pacific region were down more than 3 percent after news the talks had collapsed, with Japan’s Nikkei average and Hong Kong’s Hang Seng both down more than 5 percent.

U.S. crude oil prices fell more $2 toward $45 a barrel on news of the bailout bust.

Senators negotiated late into the night on a possible compromise that participants said fell apart over proposed wage concessions by the powerful United Auto Workers union.

“We were three words away from a deal,” said Sen. Bob Corker, a Tennessee Republican who proposed the alternative and led the talks.

Sen. Christopher Dodd, a Connecticut Democrat, said the main issue of disagreement was the date to require the Detroit autoworkers’ pay parity with foreign-based U.S. auto manufacturers.

General Motors Corp GM.N and Chrysler LLC are seeking billions of dollars in immediate aid, while Ford Motor Co F.N wants a hefty line of credit.

The industry is reeling from depressed sales, made worse by the credit crunch and the recession and GM and Chrysler said government intervention was required now to avert potential failure.

The House of Representatives passed its version of a Democratic-sponsored bailout on Wednesday, but Senate Republicans rejected that measure.

Additional reporting by John Crawley; Editing by Eric Walsh