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By Thomas Ferraro and John Crawley
WASHINGTON, Dec 9 (Reuters) - The fate of the U.S. auto industry is on the line as the White House and congressional Democrats hammer out details of a plan to extend emergency loans to the automakers in exchange for tough oversight and possibly a government stake in the automakers.
Congressional Democrats and the White House have been in talks for several days to finalize an emergency loan package estimated to be worth up to $15 billion to prevent the collapse of General Motors Corp (GM.N) and Chrysler LLC. Longer-term help also could be on the way if certain conditions were met.
Under terms of the draft legislation, which continues to be negotiated, the U.S. government would receive warrants for stock equal to at least 20 percent of the loans that the automakers would receive.
The language of the legislation was still being finalized on Tuesday morning, an administrative official told Reuters.
The U.S. economy lost more than 530,000 jobs during November, further increasing the urgency for help to stop the collapse of GM and Chrysler and save more than 350,000 industry jobs and millions of others that depend on the industry.
President George W. Bush has voiced concern about the automotive industry’s ability to survive, prompting a meeting between White House aides and Democratic staffers.
The administration has maintained that any plan must include best efforts to guarantee taxpayer dollars are paid back and that the automakers are able to reorganize and compete.
Democrats were trying to allay administration concerns with a counter proposal. They said they were confident a deal could be reached.
In return for aid, lawmakers have requested a serious commitment from automakers to change the way they do business. GM, Ford Motor Co (F.N) and Chrysler submitted business-plan information to Congress on their plans last week with a $34 billion bailout request.
The latest draft would release loans later this month while establishing an oversight office of one or more officials to ensure compliance by the automakers. No bonuses or golden parachutes for top executives would be permitted and the Big Three would have to sell their company aircraft.
The legislation could also require the appointment of a “car czar” to oversee the industry’s restructuring. Speaker of the House Nancy Pelosi said she favors former Federal Reserve chief Paul Volcker in that role. [ID:nL926255]
The proposal also sets a March 31 deadline for the companies receiving loans to submit detailed plans of how they intend to cut costs and further overhaul their businesses.
The time frame means any long-term restructuring would occur under President-elect Barack Obama, who is believed to be more sympathetic than the Bush administration to problems affecting U.S. automakers.
Problems plaguing the auto industry have spread beyond the United States. Italian carmaker Fiat said it was too small to survive alone. Sweden is reportedly considering a rescue package for Volvo and Saab. (Writing by Patrick Fitzgibbons and Christopher Doering; editing by Steve Orlofsky)