US Automotive bailout fails in US Senate

[Dave_au]

Breaking news, getting closer to Game Over:

Originally Posted by News.com.au

THE US Senate have failed to reach a deal on a controversial multi-billion dollar bailout for the beleaguered car industry, Senate Majority Leader Harry Reid said.
"I'm terribly disappointed that we are not able to arrive at a conclusion,'' Mr Reid said after lawmakers spent hours trying to hammer out a compromise over proposed federal loans for the Detroit automakers.

"We have tried very, very hard to arrive at a point where we could legislate for the automobile industry.''

"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight. Millions of Americans, not only the auto workers but people who sell cars, car dealerships, people who work on cars are going to be directly impacted and affected,'' Mr Reid said.

Republican Minority Leader Mitch McConnell said his allies in the Senate felt that the rescue package which consisted of some $14 billion in short-term loans, would not succeed in rescuing major automakers from the brink of collapse.

"None of us want to see them go down but very few of us had anything to do with the dilemma that they've created for themselves,'' said Mr McConnell.

"And so the question was: 'Is there a way out?' and the administration negotiated in good faith with the Democratic majority a proposal that was simply unacceptable to the vast majority of our side because we thought it, frankly, wouldn't work.''

The Senate failure to reach accord means that any Government backed bailout of the US auto sector will likely have to wait until next year.

The House of Representatives passed its version of the rescue plan for Detroit's automakers on Wednesday but the proposal met stiff opposition from Republicans, sending lawmakers hustling to make adjustments.

The legislation would have provided General Motors and Chrysler bridge loans to operate until March 31, and required a restructuring plan to ensure their long-term survival while repaying Government aid.

Republican Senator Bob Corker, who spearheaded the alternative proposal, attributed the breakdown to differences over employee compensation, and said that a union representative from the United Auto Workers was present for the talks.

"This is a highly technical matter, involved volunteer employed benefit accounts, it involved bonds, it involved all kinds of discussions that were technical in nature,'' Mr Corker said.

"And through all of that, and we had the United Auto Workers representative in the room, we had the three companies in another room. We were talking to bondholders on the phone. Certainly talking to our colleagues,'' he added.

"We are about three words away from a deal.''

Democrat Chris Dodd, chairman of the Senate banking committee, lamented the breakdown, particularly with the holidays approaching.

"We will leave here tonight and go home for the holiday recesses but for the literally hundreds of thousands of people whose jobs depend upon this industry, this will not be a joyous season wondering whether or not their jobs, their livelihoods, their homes, their children's futures are at risk,'' Mr Dodd said.

"It is disheartening to me, to put it mildly, that we were unable to come to that agreement.''

After warning it could run out of money within weeks, GM acknowledged ahead of the vote that it was considering "all options'' including bankruptcy, and had hired a team of legal advisers.