US AUTO INDUSTRY IN TROUBLE
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Auto industry bailout bill fails in US Senate
Published on Fri, Dec 12, 2008 at 09:44, Updated on Fri, Dec 12, 2008 at 11:51 in Business section
Tags: Auto Industry, Economic Crisis , Washington
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Washington: The US Senate failed on Thursday night to reach a last-ditch compromise to bail out automakers, effectively killing any chance of congressional action this year.
The $14 billion legislation officially died in the Senate late on Thursday after supporters failed to get enough support in a procedural vote.
Republican-brokered talks faltered, leaving the chamber at a dead end on an approach for extending $14 billion in loans to avert a threatened collapse of one or more automakers, Senate Majority Leader Harry Reid said in remarks on the floor.
"It's over with," Reid said.
Markets across the Asia-Pacific region were down more than three per cent after news the talks had collapsed, with Japan's Nikkei average and Hong Kong's Hang Seng both down more than five per cent.
US crude prices fell by nearly $2 to $46.11 a barrel.
The White House said it would evaluate its options in light of the collapse of the bailout legislation.
White House spokesman Tony Fratto declined to say what those options included.
The Bush administration has resisted Democrats' past demands to use some money from the $700 billion bailout package approved in October to help struggling financial institutions to help the automakers.
Fratto said the failed legislation had "presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."
Lawmakers planned to move ahead with a procedural vote on a Democratic-sponsored bill negotiated with the White House that Reid admitted would not succeed.
"There is too much difference" between negotiators to reach an agreement," the Nevada Democrat said.
The late night development followed intense discussions on a possible compromise that participants said fell apart over proposed wage concessions by the powerful United Auto Workers.
"We were three words away from a deal," said Senetor Bob Corker, a Tennessee Republican who proposed the alternative and led the talks.
Senetor Christopher Dodd, a Connecticut Democrat, said the main issue of disagreement was the date to require the Detroit autoworkers' pay parity with foreign auto manufacturers.
General Motors Corp and Chrysler LLC are seeking billions of dollars in immediate aid, while Ford Motor Co wants a hefty line of credit.
The industry is reeling from depressed sales, made worse by the credit crunch and the recession and GM and Chrysler said government intervention was required now to avert potential failure.
The House of Representatives passed its version of a Democratic-sponsored bailout on Wednesday but Senate Republicans rejected that measure.
A Senate aide said congressional debate on the bailout legislation is over for this year and is "now up to Secretary Paulson" on whether to use Treasury Department's TARP funds to help the industry.
Polls show Americans split on bailing out the Detroit automakers, widely criticised for fighting tougher fuel efficiency standards and poor model designs that have left the companies gasping for life with a stable of products losing popularity with consumers.
Because of their shared suppliers and vendors, industry fears the failure of one Detroit manufacturer could drag down the other two as well as other businesses.
GM, Ford and Chrysler employ nearly 250,000 people directly, and 100,000 more jobs at parts suppliers could hang on their survival. The companies say 1-in-10 US jobs are related to the auto sector.
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