Congress puts forth bailout plan with strict demands

GM, Ford, Chrysler and their suppliers are unassuringly counting on a lame-duck Congress and a lame-duck president for help. Republicans in Congress, as well as the Bush administration, remain skeptical of a bailout. And Congressional leaders are aiming to impose serious conditions on any loan guarantees provided to the automakers.

There are currently two competing aid packages being put together, one from each chamber of the US Congress. A Senate proposal by Michigan Democratic Senator Carl Levin calls for the automakers to submit detailed restructuring plans and make commitments to building more fuel-efficient vehicles.

But the House version (House of Representatives) stipulates far stricter conditions. The plan, backed by Democratic Speaker of the House Nancy Pelosi of California, calls for the government to hold veto power over any major business decisions by automaker who receive aid. It also requires the Big 3 to submit a "plan for long-term viability and international competitiveness" by the end of March next year.

And there is more. The government would be first in line amongst the companies' creditors and the US Treasury will take stock in each company worth a minimum of 20 percent of the loans provided.

But still, the Bush administration expressed skepticism at providing any additional aid beyond the 25 billion in loans approved in September for automakers to use for plant re-tooling and investment in future products.

Automakers are seeking an additional 25 billion on top of that to secure their liquidity through 2009. GM, Ford and Chrysler are burning cash at unsustainable rates. GM says it will run out of money by mid-2009 if it does not secure a government bailout.

Democrats would need a two-thirds majority in both houses of Congress to override a presidential veto of any bill they pass, which is very unlikely.