U.S. lawmakers, White House reportedly agree on $15-$17 bln auto bailout plan

(RTTNews) - Congressional Democrats and the White House have reportedly reached an agreement late Friday on an emergency aid for the big-three automakers of between $15 billion and $17 billion, an amount the companies suggested would be sufficient to carry them into March of next year. The agreement came after executives from the beleaguered auto industry pleaded with lawmakers for help and U.S. data showed employers axed more than 533,000 jobs in November, the highest monthly job-loss in 34 years. The details of the package are yet to be decided, with more talks expected on Saturday and Congressional votes on a bill scheduled for next week.

The bailout amount reportedly agreed upon is far less than the $34 billion in loans requested this week by General Motors (GM | Quote | Chart | News | PowerRating), Ford Motor (F | Quote | Chart | News | PowerRating), and Chrysler, but it would keep them going into the next year. The "Big 3" U.S. automakers had returned to Capitol Hill on Friday for their second round of congressional testimony and to seek help to survive a sharp downturn in sales, fueled first by the credit crisis and now recession.

The general feeling among the members of Congress, at the hearing, seemed to be that the automakers have committed serious mistakes over the last few years by not preparing for lean times and relying too heavily on sales of gas-guzzling SUVs, among other things, reports indicated. Congressional members also argued that giving money to the automakers does nothing to increase the demand for cars. However, new signs of deterioration in the U.S. job market added impetus to appeals for providing a down payment to keep the industry afloat until early 2009. The impact of a failure in the industry might become too much for the economy to bear.

This is the second time that the automakers have approached Congress asking for money. Their first attempt, which took place last month, was rebuffed as lawmakers felt that the money would not be wisely spent. Congressional leaders had asked the auto executives - Rick Wagoner of General Motors, Alan Mulally of Ford (F | Quote | Chart | News | PowerRating) and Robert Nardelli of privately held Chrysler - to return this week with more comprehensive plans.

According to reports, the emerging deal would draw funds from a program originally meant to help the industry retool to meet higher fuel-economy standards. Many Democrats oppose tapping the fuel-efficiency loans out of concern the industry would backtrack on its environmental commitments and are pushing President Bush to give the auto makers access to the $700 billion pool created to aid financial-industry companies. Bush and many Republicans oppose the idea.

In other developments, Chrysler has hired bankruptcy firm Jones Day to provide counsel for a possible Chapter 11 filing, according to several people familiar with the matter. In a statement, Chrysler confirmed that it has retained Jones Day and other advisers to provide a comprehensive independent analysis of the various options available to the company. Also, the Canadian units of the Big Three have asked the Canadian government for aid. Ford is seeking a $2 billion line of credit, while Chrysler asked for a $1.6 billion loan. The amount GM has requested for is not clear.

Chrysler's efforts have been complicated by increasing congressional scrutiny as to why its majority owner, Cerberus Capital Management LP, is not helping the auto maker. Nardelli acknowledged Friday that he has appealed to Cerberus for help and was turned down. A Cerberus spokesman has disputed that notion.

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