BUSINESS

Deal Reached In Principle On $15B Auto Bailout

01/08/2009 05:12 am ET | Updated May 25, 2011

UPDATE 12/09 at 9:58PM:

The Associated Press reports that a deal on a $15 billion auto bailout has been reached in principle:

Congressional aides and a senior administration official say the White House and congressional Democrats have reached an agreement in principle to speed $15 billion in government loans to struggling U.S. automakers.

The plan could see a vote as early as Wednesday. It creates a government "car czar," to be named by President George W. Bush, to oversee the bailout billions and an auto industry restructuring. The czar would have to yank back the federal money if carmakers didn't do enough to reinvent themselves.

The measure is not final and could still face obstacles from congressional Republicans, who have not approved it.

The officials spoke on condition of anonymity because they were not authorized to announce the developments.

UPDATE on 12/09 at 12:00 AM:

The Washington Post reports that the White House and Congressional Democrats have settled on a plan to rescue the ailing Big Three and that a bailout could pass this week:

Congressional Democrats and the White House yesterday settled on a plan to rush $15 billion in emergency loans to the cash-strapped Detroit automakers and were working into the night to resolve final disputes over the conditions the government should attach to the money.

Under the plan, unveiled by Democratic leaders, the Treasury Department would cut checks for the car companies as soon as next week. The proposal also calls for President Bush to name a "car czar" to manage a vast restructuring of the firms and restore them to profitability.

Democrats bent to the will of the president on several key demands, most notably in agreeing that the emergency funding would be drawn from an existing loan program aimed at promoting fuel-efficient technologies.

Still, the White House objected yesterday to several elements of the Democratic proposal, congressional aides said, including requirements that the car companies notify Washington of any transaction of more than $25 million and that they pull out of lawsuits against states seeking to enforce tougher tailpipe-emissions standards.

Earlier, the AP reported:

Congressional Democrats and the White House worked to resolve their last disputes Monday over terms of a $15 billion bailout for U.S. auto makers _ complete with a "car czar" to oversee the industry's reinvention of itself _ that's expected to come to a vote as early as Wednesday.

Top Democrats gave the White House their proposal for rushing short-term loans to Detroit's Big Three through a plan that requires that the industry remake itself in order to survive. The Bush administration gave a cool initial response, saying the measure didn't do enough to ensure that only viable companies would get longer-term federal help. Negotiators worked into the night Monday to resolve differences.

"We've made a lot of progress in recent days to develop legislation to help automakers restructure and achieve long-term viability," Dana Perino, the White House press secretary, said in a statement. "We'll continue to work with members on both sides of the aisle to achieve legislation that protects the good faith investment by taxpayers."

President George W. Bush himself said it was "hard to tell" if a deal was imminent because definite conditions had to be met. "These are important companies, but on the other hand, we just don't want to put good money after bad," he said in an interview with ABC's "Nightline."

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