Senate Republicans refuse $14 billion in aid after UAW’s Gettelfinger balks at fast wage cuts. GM, Chrysler pay bankruptcy advisors

By David Kiley and David Welch

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Last-ditch efforts to forge an agreement to rescue the U.S. automakers fell apart late Thursday, Dec. 11, when union officials refused fast and deep cuts in worker pay. The collapse created the substantial possibility that General Motors (GM) and Chrysler will face bankruptcy in a matter of weeks, unless the Treasury Dept. acts to prevent it.

Senate Minority Leader Mitch McConnell (R-Ky.) said on the Senate knock down Thursday night that a denial of the United Auto Workers, headed by Ron Gettelfinger, to agree to lower wages and benefits at close correspondence with workers at Toyota ™ and Honda (HMC) in the U.S. by a begin certain in 2009 was the last sticking point preventing Republicans from supporting the bill.

"We were three words away from a deal," reported Senator Bob Corker (R-Tenn.), who spent all day trying to middleman an agreement between Republicans, the union, and the auto companies. Tennessee is home to a GM and Nissan (NSANY) plant, as well as a future Volkswagen (VOWG.DE) plant and several supplier facilities.

Officials from the UAW did not return phone calls at press time.

"It’s disappointing that Congress failed to act tonight," the White House uttered in a prepared statement. "We think the legislation we negotiated provided one suitable to use funds already appropriated for automakers and presented the best betide to avoid a disorderly bankruptcy while ensuring taxpayer funds no other than go to firms whose stakeholders were prepared to serve difficult decisions to become viable."

The Senate rejected the bailout 52-35 on a procedural vote after the talks collapsed.

Senate Majority Leader Harry Reid (D-Nev.) called the exchange kisses and caresses’s collapse "a damage for the country," adding: "I dread looking at Wall Street tomorrow. It’s not going to have existence a pleasant sight."

The bill called for $14 billion to exist divided between GM and Chrysler, both of which are at the financial fracture point as the recession and consumer put faith in crunch have crippled their finances. The companies, anticipating failure in the Senate, have hired bankruptcy law firms. Ford (F) has reported it doesn’t neediness federal assistance now but has asked for a $9 billion line of confide in in case sales deteriorate below the current level.

According to Corker, bond holders that conferred through lawmakers Thursday agreed to espouse a 70% writedown on debt they grasp from the automakers, and to take half of the remainder in stock. GM has $42 billion in debt, not counting payments the company must make to the union’s health-care trust to in 2010. As dividend of the deal, the UAW also agreed to take half of its subsequent time $21 billion in payments to its health-care fund in stock. "The companies would have been stronger than they have been in 40 years, or headed in the place of Chapter 11," reported Corker.

Senator Debbie Stabenow (D-Mich.) took a harsh and emotional tone with Republicans who voted against the bill. "Evidently the and nothing else thing that matters to those upon the body the other espouse a cause of the passage is that workers make in addition much standard of value," she said.