The Big Three automakers renewed their plea for an emergency federal bailout, as the head of General Motors Corp. told a deadlocked Congress the industry has made mistakes and economic forces have pushed it “to the brink.”
GM Chief Executive Rick Wagoner said time is running short and his company could be out of funds by the end of the year. “We’re here today because we made mistakes,” he said in written testimony to the Senate Banking Committee in Washington. “And we’re here because forces beyond our control have pushed us to the brink.”
Wagoner, Chrysler LLC Chief Executive Robert Nardelli and Ford Motor Co’s Alan Mulally are asking for as much as $34 billion in federal aid.
The three men demonstrated contrition by pledging to work for $1 a year and traveling to Washington by car. They were ridiculed at a hearing last month for taking separate private jets and left empty-handed after pleading for $25 billion.
Democrat Senator Carl Levin, from the carmakers’ home state of Michigan, said “it’s essential” that President George W Bush and President-elect Barack Obama “become more active” in talks to rescue the carmakers.
Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, praised the chief executives for coming up with new plans. They have done “far more than the financial companies to show they deserve taxpayer support,” he said.
The senior Republican on the panel, Senator Richard Shelby of Alabama, said he still opposes a bailout.
As Thursday’s hearing began, White House spokeswoman Dana Perino said it is up to the automakers to show that their plans for revamping their companies will work.
“It’s too early to give these plans a grade,” Perino said. “The linchpin of our support has been that we would not provide taxpayer dollars unless they could prove viability.”
GM and Chrysler say they need the first installments on a rescue package this month to avoid running out of cash. Ford has requested a $9 billion credit line it said it may not need to tap.
“I recognise this is a significant amount of public money,” Nardelli said in written testimony. “We believe this is the least costly alternative considering the depth of the economic crisis and the options we face.”
US lawmakers have said they may schedule votes next week to aid automakers after hearings today and tomorrow. Leaders haven’t resolved a deadlock over how to provide aid, with Republicans backing use of Energy Department loans that were intended to help retool the industry and Democrats preferring to tap a $700 billion rescue package targeted for financial institutions.
“The collapse of one or both of our domestic competitors would threaten Ford because we have 80 per cent overlap in supplier networks and nearly 25 per cent of Ford’s top dealers also own GM and Chrysler franchises,” Mulally said.
In a related development, GM and Chrysler executives were said by a person familiar with their private discussions to be considering accepting a pre-arranged bankruptcy as the last- resort price of securing the bailout.
The executives have said publicly that bankruptcy would lead to liquidation as customers abandoned the companies. Wagoner said on Thursday bankruptcy isn’t in his plan.
Staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy — negotiated with workers, creditors and lenders — could be used to reorganize the industry without liquidation, a person familiar with that matter said.
