WASHINGTON (Reuters) - Top executives of the three U.S. automakers lobbied House Speaker Nancy Pelosi on Thursday for up to $25 billion in additional aid and access to the Federal Reserve’s borrowing window, industry sources said.
Separately, the Bush administration said automakers could soon begin applying for money under an existing $25 billion package of low-interest loans to help them meet fuel-efficiency requirements.
The White House also left the door open for extra aid, saying it would listen to other ideas as the Democratic-led Congress weighs further assistance.
The chief executives, Richard Wagoner of General Motors Corp, Alan Mullally of Ford Motor Co and Robert Nardelli of Chrysler, attended a late afternoon meeting with Pelosi at her office. After the session with the California Democrat, the executives planned to talk with Senate Majority Leader Harry Reid, a Nevada Democrat.
“We must work together to ensure the viability of the U.S. auto industry,” Pelosi said in welcoming the CEOs and Ron Gettelfinger, president of the United Auto Workers, to the meeting.
The executives had no comment as they entered Pelosi’s office.
The meeting was mainly a listening session for Pelosi to get the views of the auto industry, which is facing an unprecedented financial crisis due in large part recently to the global credit crunch that has choked off borrowing by consumers for auto purchases.
The industry is seeking access to the Fed’s discount window as well as a second loan package of up to $25 billion, according to industry sources familiar with the companies’ thinking.
Automakers stepped up pleas for help after manufacturing data showed U.S. auto sales dropping by a third in October. Analysts warned that GM and Ford will on Friday again report dismal earnings.
GM is burning through cash and has said it plans to announce more cost cuts as part of quarterly results. It warned on Wednesday the industry’s prospects are dwindling fast due to the “near collapse” in demand for cars, partly blamed on the continuing global credit crunch.
Ford shares closed Thursday down 5.3 percent to $1.98 on the New York Stock Exchange. GM fell 13.7 percent to $4.80.
The Bush administration has never favored a straight bailout and rebuffed GM last week on a proposal for capital to help it facilitate a possible merger with Chrysler LLC, bought last year by Cerberus Capital Management LP.
But White House spokesman Tony Fratto said the administration would keep an open mind amid fresh warnings from industry of a looming financial catastrophe in Michigan without substantial government intervention.
“If Congress intends to provide funding for purposes other than the advanced technology loans, we would need to hear their ideas,” Fratto said in an email. “We’ll listen if they have ideas on how they would intend to accelerate the availability of funds they have already appropriated — as long as those funds continue to go only to viable firms.”
Fratto said the administration had completed a regulatory review late on Wednesday of the technology loan program approved by Congress in September.
That $25 billion in assistance comes with strict conditions and requirements that industry officials believe will constrain the timely flow of cash at a moment when they cannot wait.
American automakers hope President-elect Barack Obama will be more open to playing a dramatic role.
Obama said on the campaign trail that the industry must remain competitive and plans to meet with executives and union members at some point to discuss their problems.
Congressional Democrats are considering steps to ease requirements of the existing loan program or approve a second aid package that would have few, if any strings attached.
That approach could be part of any broad economic stimulus plan approved during an abbreviated legislative session that would begin in 10 days.
Additional reporting by Tabassum Zakaria; Editing by Tim Dobbyn