November 18, 2008 - 5:21 pm ET
UPDATED: 11/18/08 9:03 p.m. EST


WASHINGTON -- Senate supporters of $25 billion in emergency loans for
automakers don't have the votes to pass the measure without more conditions
on the aid, Senate Banking Committee Chairman Christopher Dodd said Tuesday
night,

"Inaction is not an option," said Dodd, D-Conn.,at the end of a four-hour
hearing on legislation that would provide the aid to the Detroit 3 and
possibly suppliers.

After the hearing, Dodd said he will talk with Senate leaders and try to
find a way to help the industry.

"My sense is that between inaction and writing a (blank) check, there is a
ground I think you can build a majority for," Dodd said. "We're not there
yet. Trying to jam something through, I think, would be a mistake."

At the Senate hearing, most Republicans expressed strong opposition to the
loan legislation. Even some Democrats said stronger conditions must be
placed on any aid. Dodd said taxpayers don't want to see Detroit 3
executives continue to collect multi-million-dollar salaries while they ask
for government help.

One proposed alternative to the emergency aid would accelerate delivery of
$25 billion in previously approved loans to help U.S. automakers retool to
build fuel-saving vehicles. But Dodd noted that House Speaker Nancy Pelosi,
D-Calif., opposes that idea.

Self inflicted problems cited

Dodd's committee is considering a bill that would enable General Motors,
Ford Motor Co. and Chrysler LLC to tap into $700 billion in bailout funds
for financial institutions. A similar measure is before the House. The Bush
administration and many Republican lawmakers oppose the legislation.

In remarks to open the hearing, Dodd said many of the domestic industry's
problems are self-inflicted. But he said the failure of one or all of the
Detroit 3 would further harm the nation's economy. Dodd urged the Detroit 3
not to oppose federal regulatory efforts to improve fuel-efficiency
standards and reduce emissions.

Sen. Richard Shelby of Alabama, the committee's ranking Republican, said
that the proposed $25 billion in low-interest loans might merely tide the
carmakers over for a few months. After that, he warned, they could seek
another $25 billion or more.

"Is this just life support?" Shelby asked.

Chapter 11 suggested

Sen. Bob Corker, R-Tenn., suggested Chapter 11 reorganization might be the
best way to clean up the Detroit 3's labor legacy costs and make other
operating changes needed to assure the companies' long-term health. The
companies have rejected that idea, arguing that consumers would shun cars
produced by an automaker company in bankruptcy.

Corker said it is unlikely Congress will complete a rescue package for the
Detroit 3 during its lame-duck session. GM executives have said the company
cannot wait for help until President-elect Barack Obama is inaugurated in
January.

Sen. Jim Bunning, R-Ky., raised the possibility of a prepackaged bankruptcy,
which would have the federal government provide bankruptcy financing while
the Detroit 3's stakeholders worked through a reorganization plan.

Sen. Robert Bennett, R-Utah, was more sympathetic. He said he believes
Detroit 3 executives understand their challenges. He expressed hope that
government can provide "as soft a landing as possible."

Committee Democrats were more receptive to the bailout proposal. Sen.
Sherrod Brown, D-Ohio, said failing to help the Detroit 3 now was the surest
way to turn an economic recession into a depression.

Some Democrats sought to tie the aid to conditions.

Boost fuel efficiency

Sen. Robert Menendez, D-N.J., said the industry should agree to increases in
fuel economy standards beyond 2020. He also said automakers should stop
challenging the authority of states to enforce their own greenhouse gas
emissions rules.

Sen. Robert Casey, D-Pa., said automakers that get loans should provide the
government with monthly reports on their progress in meeting cost and
revenue goals.

Testifying before the committee, Sen. Debbie Stabenow, D-Mich., said the
auto industry accounts for one in 10 U.S. jobs and 4 percent of gross
domestic product.

Failure of the Detroit 3, Stabenow said, would harm the U.S. defense
industry, which relies on parts from the companies' suppliers. A bankruptcy,
she added, would cost the quasi-governmental Pension Benefit Guaranty Board
tens of millions of dollars to cover the lost pensions of workers.

"Neither failure nor bankruptcy is an option," Stabenow said.

In testimony prepared for the hearing, the Detroit 3 CEOs and UAW President
Ron Gettelfinger said that a credit crunch beyond their control has
obstructed an industry restructuring that has included plant closings, work
force reductions and a transition from production of light trucks to more
fuel-efficient cars.

Gettelfinger testified that Ford is the healthiest of the Detroit 3,
followed by Chrysler LLC and General Motors.