Facing massive job losses, the White House and congressional Democrats are working to provide about $15bn (£10bn) in loans to prevent Detroit's weakened car industry from collapsing.
After yielding to President George W. Bush on a key point, House Speaker Nancy Pelosi said the House of Representatives would consider legislation next week to provide "short-term and limited assistance" to the US auto industry while it undergoes "major restructuring."
"Congress will insist that any legislation include rigorous and ongoing oversight to guarantee that taxpayers are protected and that resources are directed to ensure the long-term viability and competitiveness" of the industry, Pelosi said in a statement. The Senate is also scheduled to be in session next week.
The legislation, which is being crafted this weekend, would act as a lifeline to General Motors Corp., Ford Motor Co. and Chrysler LLC while meeting demands from many skeptical lawmakers that Congress refrain from writing a blank check for the beleaguered industry.
Several officials in both parties said a key breakthrough on the long-stalled bailout came when Pelosi bowed to Bush's demand that the aid come from a fund set aside for the production of environmentally friendlier cars. The California Democrat spoke to White House chief of staff Josh Bolten during the day to signal her change in position, they added.
Pelosi said the billions of dollars that had been set aside to modernize plants to develop the green cars would be repaid "within a matter of weeks." Democrats said her hope was to include the funds in an economic recovery bill that lawmakers are expected to prepare for President-elect Barack Obama's signature shortly after he takes office.
Officials in both parties also said the legislation would include creation of a trustee or group of industry overseers to make sure the bailout funds were used by automakers for their intended purpose. The funds are designed to last until March, giving the incoming Obama administration and the new Congress time to consider the issue anew.
One senior Democratic aide said Pelosi was seeking a provision that would bar the automakers from using any of the funds to pursue a legal challenge to states seeking to implement tougher auto emission standards. The aide spoke on condition of anonymity because the legislation was not yet drafted.
The discussions came hours after the government reported that employers slashed 533,000 jobs in November, the worst single month's job loss in 34 years. Bush warned that at least one of the Big Three automakers might become a casualty of the severe economic crisis.Reuse content