Milton Black, center, secures a hood assembly Tuesday at the General Motors assembly plant in Arlington, Texas. - AP

Big 3 ask for $25 billion

WASHINGTON — The CEOs of the nation's Big Three automakers didn't get much respect when they pulled up at the nation's money pump asking for a $25 billion fill-up.

Senators weren't in much of a mood to talk about it Tuesday, at least not without a heavy dose of sarcasm.

"No one can say that they didn't see this coming," Banking Committee Chairman Chris Dodd, D-Conn, told the executives sitting in a row before him.

The industry was "seeking treatments for wounds that I believe to a large extent were self-inflicted."

And Dodd's actually a supporter of the new lifeline, like most Democrats and President-elect Barack Obama.

Bailout foe Sen. Richard Shelby, R-Ala., asked: "Will it be used to improve their business model — which has been a failure — and product lines or is this just life support?"

The three auto chieftains testified that the rescue loans weren't just to keep their companies afloat.

This could be a national catastrophe, they said, warning that millions of layoffs would follow their demise as damaging effects rippled across an already-faltering national economy.

Still, the new rescue plan appeared stalled on Capitol Hill, opposed by the Bush administration and Republicans in Congress who don't want to dip into the Treasury Department's $700 billion financial bailout program to come up with the $25 billion in loans.

The automaker chiefs blamed their economic woes not on any management mistakes or lack of vision but on the larger financial crisis triggered by plunging home prices, rising mortgage foreclosures and frozen borrowing.

"There was this unbelievable bubble," said Chrysler LLC CEO Robert Nardelli.

He first saw it in housing as chief of Home Depot Inc., and then with the bursting of the credit bubble as head of Chrysler.

As for the cars the Big Three have been building, Nardelli said they were only responding to customers who wanted more expensive, more powerful cars "to go with their second homes and boats. ... We chased that consumer demand."

General Motors Corp. CEO Rick Wagoner said that failure of the auto industry "would be catastrophic," resulting in three million jobs lost within the first year and "economic devastation (that) would far exceed the government support that our industry needs to weather the current crisis."

Ford Motor Co. CEO Alan Mulally told senators, "We at Ford are well on our way to transforming our country and building a new Ford."

Nardelli and Wagoner said they'd accept a Lee Iacocca-style pay cut in a spirit of sacrifice for federal help, while Mulally wouldn't commit to such a "symbolic gesture." Iacocca, the former Chrysler CEO, reduced his salary to $1 in 1979 as part of a $1.2 billion-bailout agreement.

Sympathy for the industry was sparse, with bailout fatigue dominating Capitol Hill and many lawmakers bursting with pent-up criticism of the auto industry.

Sen. Mike Enzi, R-Wyo., complained that the larger financial crisis "is not the only reason why the domestic auto industry is in trouble."

He cited "inefficient production" and "costly labor agreements" that put the U.S. automakers at a disadvantage to foreign companies.

GM's Wagoner challenged criticism that his company was not keeping pace with the times, saying it had been on the brink of a turnaround before the financial meltdown hit, reducing sales to the lowest per-capita level since World War II.

Joining the Big Three CEOs, Ron Gettelfinger, president of the United Auto Workers union, said the emergency loans were important for the survival of the industry and union jobs. He said the UAW recognized that "in order for these companies to be competitive, we had to make tough calls" in labor concessions.

Rank-and-file Republicans and Democrats from states heavily impacted by the auto industry worked behind the scenes trying to hammer out a compromise that could speed some aid to the automakers before year's end. But it was an uphill fight.

"You're asking an awful lot," Dodd, said at the close of the session. "I'd like to tell that you in the next couple of days this is going to happen. I don't think it is."

Earlier, House Majority Leader Steny Hoyer said Congress might have to return in December — rather than adjourning for the year this week, as expected — to consider an auto bailout.

"Dealing with the automobile crisis is a pressing need. We are talking about a lot of people ... and a great consequence to our economy," said Hoyer, D-Md.

The financial situation for the automakers grows more precarious by the day. Cash-strapped GM said it will delay reimbursing its dealers for rebates and other sales incentives and could run out of cash by year's end without government aid.

In the Senate, Democrats discussed but rejected the option favored by the White House and GOP lawmakers to let the auto industry use a $25 billion loan program created by Congress in September — designed to help the companies develop more fuel-efficient vehicles — to tide them over financially until President-elect Barack Obama takes office.

"There is a way to do this," said Sen. Mitch McConnell, R-Ky., the minority leader.

House Speaker Nancy Pelosi, D-Calif., and other senior Democrats, who count environmental groups among their strongest supporters, have vehemently opposed that approach because it would divert federal money that was supposed to go toward the development of vehicles that use less gasoline.

"I don't think that's going very far in our caucus," said Senate Majority Leader Harry Reid, D-Nev.

Instead, they want to draw the $25 billion directly from the $700 billion Wall Street bailout — bringing the government's total aid to the car companies to $50 billion.

A Senate vote on that plan, which would also extend jobless benefits, could come as early as Thursday, but it currently lacks the support to advance. Treasury Secretary Henry Paulson renewed the administration's opposition on Tuesday.

The White House said the government shouldn't send any more money to the struggling auto industry on top of the already-approved loans.

"We don't think that taxpayers should be asked to throw money at a company that can't prove that it has a long-term path for success," said White House Press Secretary Dana Perino.

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