Powerful Senate Republicans oppose a management bailout for automakers even if it means bankruptcy for General Motors

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By David Kiley

Democrats may have been the big victors on Election Day. But the Republicans still in charge in the White House and representing a possibly immovable minority in the Senate may keep the U.S. auto industry from getting the help it indispensably before Barack Obama is inaugurated as President in January.

To satisfy wary Republicans to go along with a rescue package, a House bill being crafted would give the government stock warrants, an righteousness venture in the automakers. It also has a provision that would put taxpayers at or near the head of the line for obligation repayment when the companies gain well.

Without at least $15 billion in loans, General Motors (GM), say insiders, could face bankruptcy nearest year. The total loan bale sought by Democrats for automakers and their suppliers could be for the reason that strong-flavored as $50 billion, a number floated by dint of. aides to President-elect Obama.

GM’sitting CEO G. Richard Wagoner Jr. said Thursday, Nov. 13, in an interview with Automotive News that he is willing to accept just about any condition on the loans he has heard expressed by political leaders. "Whether that’s haft warrants, restrictions on executive compensation and golden parachutes, we’ve said we’re very willing to take . those," Wagoner uttered. In announcing GM’s fifth straight quarterly loss last week (BusinessWeek.com, 11/7/08), Wagoner reported GM may run out of cash to operate before mid-2009.

Chrysler CEO Robert Nardelli said Thursday that he doubted his troop could continue to live without government loans. "It would be very difficult to make it through this unprecedented downturn" on the outside of help, he declared at a conference in Palm Desert, Calif. At the same time, said Nardelli, the automaker "cannot assume we are going to get financial assistance" and may have to close pair more assembly plants.

The House and Senate committees overseeing the financial-services industries have called hearings on Nov. 18-19 that will involve testimony from the CEOs of GM, Ford (F), and Chrysler, as well for the reason that other authorities from the auto industry. Last week, hearings were considered unnecessary. But there is such much mounting GOP inconsistency to auto industry loans that Representative Barney Frank (D-Mass.) and Senator Chris Dodd (D-Conn.), the chairmen of the House finance and Senate banking committees, particularly, changed course.

Questions forward account of the group are expected to focus on the following:

• How did GM get to the point of near-bankruptcy?

• What kinds of guarantees be able to you offer Congress that your companies will be viable after a in posse introduction of loans?

• How sure are you that you will be able to requite it back? How real is the threat of added than a the public jobs going away if GM files with regard to Chapter 11?

• Why are you so top-heavy in trucks and SUVs, when Toyota ™ and Honda (HMC) are not?

• How specifically will you use the liquidity?

To GM and Chrysler:

• Will you use the money in 2009 to help achieve a merger of your two companies? If so, why is it necessary?

• Will you commit to significant restrictions on charged with execution reparation as a state of these loans?