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New Aid To Auto Industry Urged

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The Associated Press

Published: November 9, 2008

WASHINGTON - Democratic leaders in Congress asked the Bush administration Saturday to provide more aid to the struggling auto industry, which is bleeding cash and jobs.
House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout to include car companies.

"A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy, and the livelihood of the automobile sector's work force," they wrote. "The economic downturn and the crisis in our financial markets further imperiled our domestic automobile industry and its work force."

The administration did not offer direct comment on the request to broaden the $700 billion financial industry bailout so automakers could get a share.

Automakers already want an additional $50 billion in loans from Congress to help them survive tough economic conditions and pay for health care obligations for retirees. The companies are seeking the loans as part of an economic aid plan that is now more likely to come together early next year rather than in a postelection session of Congress this month.

Top executives of General Motors, Ford and Chrysler and the president of the United Auto Workers met with congressional leaders Thursday to discuss the loans.

The money would be on top of the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles. If Congress approved more loans, it would come with strings attached.

"We left the meetings convinced that our nation's automobile industry - the heart of our manufacturing sector - and the jobs of tens of thousands of American workers are at risk," Pelosi, D-Calif., and Reid, D-Nev., said in their letter to Paulson.

GM, the nation's largest automaker, warned Friday that it may run out of money by the end of the year after piling up billions in third-quarter losses and burning through cash at an alarming rate.

Ford is in better shape because the company borrowed billions of dollars in 2007 by mortgaging its factories. The company said it had enough cash to make it through 2009.

President-elect Barack Obama said Friday his transition team would explore policy options to help the auto industry.

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