By Mark Huffman
ConsumerAffairs.com
November 18, 2008
Treasury Secretary Henry Paulson says if Congress wants to bail out
General Motors and other U.S. automakers, it should appropriate the
money. But he told the House Financial Services Committee Tuesday he's
not giving carmakers any of the $700 billion from the Troubled Asset
Relief Program.
Meanwhile, Ford Motor Co. CEO Alan Mulally warned that a government failure to aid the auto industry would create "tremendous risks to our already fragile economy." Avoiding those risks is in the "public interest" that Congress would serve by providing emergency loans to automakers, Mulally said.
In prepared remarks, Mulally called on Congress "not to think of individual companies but rather of the industry -- and the economy -- as a whole."
Paulson didn't deny that it "would not be desirable" for carmakers to fail but said that the existing bail-out program isn't a suitable vehicle.
"Under the current plan we've outlined, the only capital plan we have in place, they're not eligible," Paulson told committee members. "If we were to implement the program we're working on -- where we put a small amount of money into a Fed liquidity facility -- that facility could provide support for triple-A auto paper."
Lawmakers, back in Washington for a brief lame duck session of Congress, are looking at a number of options to provide help to General Motors specifically but are quickly running out of time. GM has said it may run out of cash before the end of the year.
While Democrats generally support a measure to provide cash to GM, Republicans are generally opposed. Interviewed on CNBC Tuesday, Sen. Richard Shelby (R-AL) said GM and other troubled carmakers should file for Chapter 11 bankruptcy protection and reorganize.
"Giving them money to keep doing the same thing they're doing, the same way they're doing it, won't work," he said.
Congressional Democrats said they intended to push for a plan to carve a rescue package out of the $700 billion TARP funds, but admitted it was far from clear whether they had the votes needed to pass it. The White House has suggested that GM tap into a $25 billion package Congress approved last summer to help carmakers retool to make more fuel efficient cars. Both Democrats and Detroit executives have resisted that proposal.
In steps to save cash, GM said Tuesday it might sell its stake in Japanese carmaker Suzuki, while holding back millions of dollars in "incentive" cash for GM dealers.
