WASHINGTON - Congressional Democrats are drafting legislation that would give the teetering Detroit automakers at least $15 billion in emergency loans early next week and grant the federal government broad authority to manage a massive restructuring of their operations.
The proposal, which could be put to a vote in Congress as soon as tomorrow, would establish a seven-member "auto board" of cabinet officials and a chairman to be appointed by President Bush to oversee both the short-term loans and a long-term effort to restore the faltering industry to profitability. If the companies take the cash, they would be accountable to the government for nearly every move, and for every transaction of $25 million or more.
As part of that restructuring, General Motors Corp., Chrysler L.L.C. and Ford Motor Co. could be asked to jettison their top executives, one of the chief architects of the plan, Senate Banking Committee Chairman Christopher J. Dodd (D., Conn.) said yesterday. Stating bluntly that "GM is in the worst shape" of the three auto giants, Dodd said that GM chairman Richard Wagoner, the company's chief since 2000, "has to move on."
"You have got to consider new leadership," Dodd said on CBS's
Face the Nation
. "If you're going to really restructure this, you have got to bring in a new team to do this."
President-elect Barack Obama seemed to echo that view during an appearance on NBC's
Meet the Press
yesterday, saying that "we have to put an end to . . . the head-in-the-sand approach to the auto industry that has been prevalent for decades now."
Obama expanded on the point later at a news conference in Chicago, saying management should be replaced if the "team that's currently in place doesn't understand the urgency of the situation and is not willing to make the tough choices and adapt to these new circumstances."
The president-elect also for the first time publicly endorsed the idea of a short-term loan program to keep GM and Chrysler afloat through the first three months of the new year. Ford is also seeking access to a government line of credit, but says it would only ask for the money if the economy weakens significantly. By contrast, GM executives have said that, without government help, they could run out of cash within the month.
On Friday, Democrats in Congress broke a stalemate with the White House over aid to the automakers, agreeing to draw funds from an existing loan program created by Congress to promote fuel-efficient technologies, as the White House had long proposed. Since then, the two sides have worked through the weekend to reach a compromise, but they have yet to agree on many details.
A White House official declined late yesterday to comment on the Democratic proposal. The Bush administration has drafted its own proposal for managing the bailout, including appointment of a "financial viability adviser" within the Commerce Department.
As described by Democratic aides, the Democratic proposal treats the auto giants more like the banks and other financial institutions that have sought help under the $700 billion financial rescue program administered by the Treasury Department.
Under the Democrats' proposal, the Big Three would be eligible for low-interest loans to be disbursed by the Treasury next Monday. The seven-year loans would carry a 5 percent interest rate for the first five years, and 9 percent thereafter - the same terms offered to financial firms under the Treasury program.
As long as the loans are outstanding, the auto companies would be barred from paying dividends to their shareholders or bonuses to their top executives. And they would be required to submit a long-term restructuring plan to the auto board by March 31.
Democratic leaders hope to bring their plan up for a vote this week, when lawmakers return for a special session. Dodd said he is optimistic that it would win congressional approval, despite distaste among lawmakers in both parties for the idea of pouring taxpayer dollars into companies on the brink of failure.
"Even people who don't like this idea, none of us want to wake up on Jan. 1 and discover we don't have an industry to save," Dodd said.
Others were less sanguine. Richard Shelby (R., Ala.), the senior Republican on the Senate Banking Committee and a staunch foe of government aid for the car companies, derided the plan as "a bridge loan to nowhere." Speaking on
Fox News Sunday
, Shelby said he may filibuster the proposal in the Senate, a move that would effectively kill it.