Auto-bailout talks enter final stages

WASHINGTON — Congressional Democrats and the White House settled on a plan Monday to rush $15 billion in loans to cash-strapped Detroit automakers and were working into the night to resolve final disputes over the conditions the government should attach to the money.

Under the plan, unveiled by Democratic leaders, the Treasury Department would cut checks for the car companies as soon as next week.

The proposal also calls for President Bush to name a "car czar" to manage a vast restructuring of the firms and restore them to profitability.

Supporters were cautiously optimistic that the plan would attract enough Republican support to win congressional approval by the end of this week.

House Speaker Nancy Pelosi said she hoped Bush's appointee would not need to be replaced by President-elect Obama, raising the prospect that the departing and incoming administrations would cooperate in selecting someone.

Under the proposal, the car czar's authority would stop short of the near-complete operational control some critics wanted the new monitor to have.

But the official would negotiate far-reaching plans for restructuring General Motors and Chrysler by March 31. Ford, which is in better financial condition, apparently would not be part of the initial outlay.

If the restructuring plans, intended to ensure the companies' longer-term financial viability, are approved by the monitor, billions more in aid could be disbursed; if not, the companies would be ineligible for more money and would have to pay back the government loans they received.

The car czar also would have veto power over any transactions that exceed $25 million or that would substantially change the companies' financial condition while the government loans are outstanding. And the federal government would receive ownership stakes in the companies in exchange for the loans.

The plan, which grew out of three days of negotiations involving Democratic leaders in Congress and Bush administration officials, is being reviewed by the White House, which withheld immediate support Monday night.

But the specifics appear to match most of the terms Bush has been insisting on since the carmakers launched their appeal for help last month.

Democrats were able to bend the will of the president on several key demands, most notably in agreeing that the emergency funding would be drawn from an existing loan program aimed at promoting fuel-efficient technologies.

In a statement, White House press secretary Dana Perino said, "Long-term financing must be conditioned on the principle that taxpayers should only assist automakers executing a credible plan for long-term viability."

Appearing briefly before reporters, Pelosi said Democrats, too, are determined to force changes in the domestic auto industry, which had been losing customers to more nimble foreign competitors even before a deepening recession slashed demand for new cars to the lowest level in 25 years.

"Come March 31, it is our hope that there will be a viable automotive industry in our country with transparency and accountability to the taxpayer. We think that is possible," Pelosi said, adding that auto executives, their employees, their shareholders and their networks of local dealers will be expected to make concessions.

"We call this a barbershop," Pelosi said. "Everyone is getting haircuts."

Talks continued late Monday in Pelosi's Capitol Hill offices. Despite the administration's last-minute objections, both sides remained optimistic that a deal could be finalized quickly.

"It is overwhelmingly likely that a bill will be on the president's desk by the end of the week," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, whose staff was taking the lead in drafting the bill.

The companies have asked for up to $38 billion in government assistance. GM executives have said they could run out of money before the end of the month.

To make it through March, GM has said, it would need as much as $10 billion in federal aid. Chrysler has said it would need about $4 billion.

Compiled from Los Angeles Times, The Washington Post and The New York Times reports