US car giants beg Congress for lifeline

The three biggest US carmakers pleaded with Congress for a $25bn (€19.7bn) lifeline to save their once-proud companies from collapse, warning of broader peril for the American economy as well.

Despite the car giants’ pleas, the new rescue plan appeared stalled in Congress, opposed by Republicans and the Bush administration who do not want to dip into the Treasury Department’s $700bn (€554bn) financial bailout programme to come up with the $25bn.

Rank and file Republicans and Democrats from states heavily impacted by the car industry worked in private trying to come up with a compromise that could speed some aid to the carmakers before year’s end. It was an uphill fight.

“Our industry ... needs a bridge to span the financial chasm that has opened up before us,” General Motors Corp. chief executive officer Rick Wagoner told the Senate Banking Committee.

He blamed the industry’s predicament not on management failures but on the deepening global financial crisis.

Also, Robert Nardelli, chief executive officer of Chrysler LLC, told the panel the bailout would be “the least costly alternative” when compared with damage from bankruptcy.

Under questioning from sceptical senators, both said they would be willing to consider slashing their salaries to 1 dollar to show a willingness to sacrifice for federal help.

Sympathy for the industry was sparse, however, with bailout fatigue dominating Capitol Hill.

Politicians bristled with pent-up criticism of the car industry, and questioned whether a stopgap loan would really cure what ails the companies.

At the start of a grilling before his committee that lasted more than four hours, Democratic Senator Christopher Dodd told the leaders of GM, Chrysler and Ford Motor Co. that the industry was “seeking treatments for wounds that I believe to a large extent were self-inflicted”.

“You’re asking an awful lot,” Mr Dodd, the panel chairman, said at the close of the session. “I’d like to tell that you in the next couple of days this is going to happen. I don’t think it is.”

Still, he said, “Hundreds of thousands would lose their jobs” if the companies were allowed to collapse.

Senator Mike Enzi, a Republican, complained that the larger financial crisis “is not the only reason why the domestic auto industry is in trouble.”

He cited “inefficient production” and “costly labour agreements” that put the US carmakers at a disadvantage with foreign companies.