WASHINGTON (Nov. 7, 2008) — The U.S. automobile industry's requests for federal assistance now exceed $50 billion.
The CEOs of General Motors Corp., Ford Motor Co. and Chrysler L.L.C. met behind closed doors Nov. 6 with Congressional leaders to make personal appeals.
Aides who helped plan the meetings described a two-part request:
* An infusion of an unspecified amount of money from the U.S. Treasury or the Federal Reserve to get through, or “bridge,” the current economic crisis; and
* $25 billion in new low-interest loans to fund retiree health-care benefits.
The requests would be on top of $25 billion in low-interest loans approved in September so auto makers and suppliers can retool to build vehicles that are more fuel efficient.
The industry contingent—including GM CEO Rick Wagoner, Ford's Alan Mulally and Chrysler's Robert Nardelli—left the meetings through a hidden exit from the office suite of Senate Majority Leader Harry Reid sometime around 6:30 p.m. Security personnel kept reporters at a distance.
“The economy and the credit crisis are significant challenges that are dramatically affecting consumer demand for automobiles,” Mr. Mulally said in a statement.
Mr. Reid and House Speaker Nancy Pelosi “are seeking ways to help the auto industry given these unprecedented economic challenges,” Mr. Mulally said. “We applaud their efforts and will work together with all of our nation's leaders to continue our transformation to greater fuel efficiency and to help protect jobs.”
Ms. Pelosi, D-Calif., and Mr. Reid, D-Nev., both issued prepared statements that failed to indicate the prospects for the requests.
John Dingell, chairman of House Energy and Commerce Committee, did comment briefly, calling the requests investments in jobs and opportunity for workers and industry. He said hundreds of thousands of jobs are at stake.
Mr. Dingell, a Michigan Democrat, called the Pelosi meeting “one of the most productive and beneficial of my career”—which now spans 53 years.
A top congressional staffer who was in the House session called the requests “options”—not a hard and fast set of proposals.
Earlier, the industry aides explained the requests:
First, the lawmakers were to be asked to use their influence, and perhaps a legislative directive, to get either the Treasury or the Federal Reserve to provide a cash infusion—via loans—into the companies.
Second, the industry leaders seek $25 billion in low-interest government loans to help the companies meet the obligations they have to newly created retiree health-benefit funds, called VEBAs. The funds were created under last year's new collective bargaining agreement with the United Auto Workers (UAW).
The new $25 billion would be included in an economic stimulus bill that Ms. Pelosi wants to consider during a lame-duck session of Congress scheduled to begin Nov. 17. She hedged earlier this week on whether there definitely will be such a bill—unless Republicans and the White House provide some support.
One industry source said one of the reasons the auto makers can't get credit from private lenders is the huge looming obligations posed by the VEBAs.
The industry group sought to make the case “that there is a need for immediate government assistance to the industry because of what's happened with the economic and credit crunch and the resulting huge drop in auto sales,” the source said.
Industry officials believe Treasury and the Federal Reserve already have authority to provide funds to improve liquidity, he said, but “if there is a need for some legislative wiggle to make that clear, then we hope that would be done.”
In other words, the stimulus bill also could include language directing the Treasury or the Federal Reserve to release funds to the auto industry.
This report ran in Automotive News, a sister publication of Tire Business.