Dec. 2 (Bloomberg) -- U.S. House Speaker Nancy Pelosi said she believes either Congress or the Bush administration will step in to aid domestic automakers because bankruptcy is “not an option.”
“I believe that an intervention will happen,” Pelosi said at a briefing in Washington. “Everybody is disadvantaged by bankruptcy, including our economy, so that’s not an option.”
Pelosi said Congress will either approve new loans for the auto industry or the Bush administration will provide funding through the $700 billion financial-markets rescue plan approved by Congress last month.
Senate Majority Leader Harry Reid told reporters today that he will have a legislative vehicle on the Senate floor Dec. 8 that can be used as a carmaker bailout measure if an agreement is reached. “We’re looking to make sure we do everything we can to take care of the auto industry, if in fact it’s viable,” Reid said.
The domestic automakers were submitting plans to Congress today to explain how they can achieve financial stability. Democratic lawmakers demanded the plans before allowing a vote on aiding the automakers.
Ford Motor Co. asked Congress for a credit line of as much as $9 billion, saying it expects to break even or be profitable before taxes in 2011. General Motors Corp. asked for up to $18 billion worth of assistance. Chrysler LLC this afternoon submitted a request for a $7 billion bridge loan.
$1 Annual Salary
Ford’s proposal said it hopes to avoid using the credit and doesn’t anticipate a 2009 “liquidity crisis,” barring a competitor’s bankruptcy or more severe economic slump. Ford plans to sell five jets and would pay Chief Executive Officer Alan Mulally a $1 annual salary if the loan is used.
Lawmakers are divided on whether to aid the automakers and whether the funds should come from the $700 billion bank-rescue fund or Energy Department loans approved in September.
Reid, a Nevada Democrat, said he will decide after Dec. 4 and 5 hearings on the issue whether the Senate will vote next week on additional aid to the automakers.
“We hope that we can work something out,” Reid told reporters. “We don’t want to throw them a lifeline if the lifeline doesn’t get them to the shore.”
Ford, GM and Chrysler must convince a divided Congress their plans to shrink are severe enough to ensure repayment of $25 billion in proposed loans.
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