Congress has given domestic automakers until the beginning of December to make the case that any federal funds to prop up the industry will be spent wisely and assist the companies to return to fiscal health.
Saying they did not have the votes to pass an emergency rescue measure this week, House and Senate leaders Thursday instructed automakers to prepare plans for their future to present before congressional committees the week of Dec. 2.
However, a bipartisan group of senators representing manufacturing states said they were disappointed by the delay as they had developed a compromise plan they believed Congress could act on immediately.
Senate Majority Leader Harry Reid, D-Nev., laid the blame for the delay squarely on the poor performance of auto industry leaders in congressional hearings this week.
"The executives of the auto companies have not been able to convince the Congress or the American people that this government bailout will be its last. And they have not provided a plan that will ensure accountability from and viability for the industry," Reid said, speaking at a press conference at the Capitol.
He added, "In light of this importance of this issue to all of us, we have decided the best way to proceed is to give the auto companies one more chance to make their case."
Reid said the Senate Banking Committee and House Financial Services Committee would then hold hearings into the plans, potentially paving the way for authorization of federal assistance the week of Dec. 8.
House Speaker Nancy Pelosi, D-Calif., joined Reid at the press conference to say that although the automotive industry is critical to the nation's economy and national security the additional delay was necessary.
"It is all about accountability and about viability," Pelosi said. "It is essential that we see some path to viability from the industry."
She added, "We reject those who are advocating bankruptcy for the industry, we reject that."
Reid and Pelosi also cited growing dissatisfaction with Congress' last move, the $700-billion financial rescue package that is acting more slowly than many in Washington hoped, as a reason for the delay.
"We want to help, but we can only help if they're willing to help themselves," Reid said. "We want them to get their act together."
Rep. Barney Frank, D-Mass., the chairman of the House Finance Committee, said there was a sense that Congress hadn't established enough controls for the financial bailout, a mistake he did not intend to repeat with aid to automakers.
"There is a sense that we did not do a good enough job of safeguarding the use of those funds and providing prevention against abuse," he said. "You could not get, I believe, through either house of Congress what some people might think was a repeat. … It has to be done in a careful way and two weeks cannot be a critical difference."
But Michigan Senator Carl Levin, a Democrat, speaking at a separate press conference with several other senators from both parties, laid out a proposal that he said could get the 60 votes needed to pass the Senate this week.
Levin's proposal was put forward with Democratic Senators Sherod Brown of Ohio and Debbie Stabenow of Michigan, along with Republican Senators Kit Bond of Missouri, George Voinovich of Ohio and Arlen Specter of Pennsylvania. The legislation would draw from an existing appropriation to help automakers retool to make more environmentally friendly vehicles.
The proposal would allow automakers to tap the funds for "bridge loans" or in exchange for a federal equity stake and oversight. However, automakers applying for the less-restricted loans would have to provide the Commerce Department with a plan for their future viability.
Levin added that when automakers paid back the bridge loans the money would go back into the account to provide modernization assistance.
"Our proposition is not only bipartisan, it is a hybrid proposal combining provisions from many sources," he said.
However, Pelosi has long voiced strong objection to the idea of repurposing the green retooling loans, favoring instead using funds allocated for the $700 billion financial rescue. But Levin said that shouldn't be an impediment.
"We cannot allow the issue of which source of already-appropriated funds for the essential purpose of preventing this economy from sliding into a depression … to prevent us from doing what needs to be done, which is to provide these loans promptly," Levin said.
Levin said he was "disappointed" in the leaders' decision to pause the process until December.
However, when asked if his party's leaders would be to blame if an automaker failed before the new program could be put into place, Levin said the main obstruction was Treasury Secretary Henry Paulson's decision not to use financial rescue funds for the automakers.
"One insurance company, one, that has made huge mistakes, AIG, has gotten $150 billion from this administration and yet they're not willing to use that fund … to provide that $25 billion," he said. "That's where the major responsibility would lie in my belief. However, this delay does cause risks."
For comments and feedback: editorial@rttnews.com