US car makers get frosty reception in bailout plea
Thursday 20 November 2008
The bosses of the big three US carmakers were lambasted for flying on corporate jets as they came to Washington to plead for money to stave off their companies' bankruptcy.
For the second day in a row, Rick Wagoner of General Motors, Bob Nardelli of Chrysler and Ford's Alan Mulally attended hearings on Capitol Hill into a proposed $25bn bailout for the tottering industry. In his most stark warning to date, Mr Wagoner said a bankruptcy filing by GM would inevitably lead to its liquidation.
Members of the House of Representatives' financial services committee are investigating how much money might be needed by the three companies, and on what terms Congress might advance the cash. However, despite proposals to limit executive pay and to hand the government warrants on car company shares, so it can gain if they return to health, the plan pushed by Democrats appeared to be running into the sand.
Reflecting public anger outside the heartlands of the industry, politicians laid in to the executives for driving their companies to the brink of failure, even while pocketing big bonuses.
And several members of the committee attacked the trio's use of corporate jets, which they suggested were an extravagance during the current crisis. Democrats have proposed that the government divert $25bn from the $700bn Wall Street bailout fund to aid the automakers. The White House wants a previous $25bn federal loan programme, aimed at funding new green car production, to be used instead, and Republicans said last night that this was the only proposal with a chance of passing through Congress and avoiding a presidential veto.
Shares in the two publicly traded companies plunged once again in lunchtime trading. GM was down 13 per cent. Ford fell 23 per cent.
Mr Wagoner said: "This is about much more than just Detroit. It's about saving the US economy from a catastrophic collapse."
The car industry directly employs about 355,000 American workers, and it says that, through related industries that are dependent on auto manufacturing and sales, it supports about another 4.5 million jobs.
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