US car bailout deal 'very likely'

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The Independent US

A deal with the US Congress to help America's failing car industry will "very likely" be reached, the White House said today.

Press secretary Dana Perino said the deal could happen early this week as pressure mounted on General Motors (GM) chief executive Rick Wagoner to step down as part of the package.

GM, Chrysler and Ford hope to convince members of the US Congress to vote on the car industry bail-out after both GM and Chrysler said they would struggle to survive beyond the end of the month without it.

The size of the package has not been finalised, but it is expected to be about 15 billion dollars (£10.1 billion). The three top executives asked for 34 billion dollars (£22.9 billion).

"It sounds like we have agreement on those basic principles that would be required for a bill that the president could sign," Ms Perino told reporters today.

Asked if an initial vote could be held tomorrow, she said that "it seems pretty soon if we haven't seen the language yet".

The White House wants the Big Three carmakers to show a detailed plan for how they will be viable in the long term and the Bush administration has said it will not support emergency help for car companies from taxpayers without such a plan.

"If they want to work with us, we'll meet them halfway," Ms Perino said of members of Congress who are working on the deal.

Senator Chris Dodd, chairman of the Senate Banking Committee, said GM chief Mr Wagoner "has to move on" as part of a government-run restructuring.

"It's not my job to hire and fire, but what I suggest is, you need to have new teams in place here... if you're going to convince the American public" that the financial relief plan is necessary and justified, he said.

He also told ABC's Good Morning America that figures showing more than a half-million people lost their jobs in November amounted to a "game-changer" in the debate over an aid package.

GM spokesman Steve Harris said the company appreciates Mr Dodd's support for the loans, but added: "GM employees, dealers, suppliers and the GM board of directors feel strongly that Rick is the right guy to lead GM through this incredibly difficult and challenging time."

United Auto Workers president Ron Gettelfinger said his union was ready to go back to the bargaining table to help the car companies, but added that workers should not be made "scapegoats" for their problems.

Yesterday, President-elect Barack Obama, who has been criticised for staying on the sidelines until now, supported the bailout legislation being drafted in Congress.

He accused car industry executives of a persistent "head-in-the sand approach" to long-festering problems.

Mr Obama told NBC's Meet the Press that Congress was doing "the exact right thing" in drafting legislation that "holds the auto industry's feet to the fire" at the same time it tries to prevent its demise.

The emerging bailout plan would draw emergency aid from an existing loan programme meant to help the carmakers build fuel-efficient vehicles, a congressional aide said.

It could include a Cabinet-level oversight board and a provision to require immediate payback of the money if the overseers decide the companies are failing to take steps to overhaul themselves.

That board would be composed of Cabinet secretaries from the departments of Treasury, Energy, Labour, Commerce and Transportation plus the Environmental Protection Agency administrator to oversee a broad car industry restructuring.

But the White House favours a single adviser, appointed by the president, rather than a board.

In return for the money, the carmakers would have to agree to terms similar to those placed on banks that receive funds under the 700 billion dollar (£472 billion) rescue package earlier this year.

These included limits on their top executives' pay packages; the end of paying dividends; giving the government a chunk of future gains; and a guarantee that taxpayers would be reimbursed before any other shareholders.