A plan worth billions to rescue ailing U.S. automakers collapsed in the Senate, raising the prospect of imminent bankruptcy for GM and Chrysler with millions of jobs at stake. Last-ditch talks on the $14 billion package, backed by Democrats and the White House, broke down late Dec. 11 after Senate Republicans insisted that union wages be brought swiftly in line with those paid by foreign automakers.
News of the failed bid to broker emergency loans sent share prices tumbling in Asia and in early European trade. The dollar also fell sharply, hitting a 13-year low against the yen.
For GM and Chrysler, the last hope for a government lifeline rested with the White House, which has so far refused to draw on the $700 billion Wall Street bailout fund for the reeling car companies. The financial bailout money "may be where they go next," said Republican Senator John Thune. Reid called on President George W. Bush to reconsider his administration's opposition to dipping into the Wall Street rescue fund, known as the Troubled Asset Relief Program (TARP).
GM, which has warned it could run out of cash within weeks, said statement it was "deeply disappointed" at the result. Before the vote, the once mighty car company acknowledged that it was considering bankruptcy among other options and had hired a team of legal advisers. Chrysler said it would "continue to pursue a workable solution to help ensure the future viability of the company." GM and Chrysler are the most troubled of the iconic Big Three, with Ford in better financial shape but worried about the knock-on effects if their counterparts go down.
Along with Bush, president-elect Barack Obama had called on Congress to approve the bailout, citing the dangers of a "rippling effect" from the collapse of the companies.
Republican Senator Bob Corker, who spearheaded his party's alternative proposal, said the breakdown came over differences on employee compensation, and said that a union representative from the United Auto Workers was present for the talks. "We are about three words -- three words -- away from a deal," he said.
Democrat Chris Dodd, chairman of the Senate banking committee, criticized Republican senators for pushing for steep wage cuts and warned the auto industry's fate was tied up with the wider economy."I'm deeply saddened. But more than saddened, I'm worried," Dodd said. "This will fail, we will go home, and I'm afraid our country will be in deeper and deeper trouble."
Copyright Agence France-Presse, 2008
