Days ago, negotiators slashed the $34 billion requested by the Big Three executives to a more modest stopgap fund -- just enough to keep General Motors Corp. and Chrysler afloat until spring. Negotiators also agreed to create a federal monitor, appointed by the president, to oversee the companies' efforts to restructure their operations to ensure future viability.
Senate Democrats aimed to have a vote by the end of the week.
In the final stages of the negotiations, the monitor was given authority to act as a de facto bankruptcy judge with great power over the operations and future shape of companies that accept government aid.
GM has said it needs $10 billion to make it until March 31 and Chrysler has asked for $4 billion. Ford Motor Co. has said it does not need emergency loans at this point, but it's unclear whether the automaker will participate in the government-supervised restructuring to get money later.
Through the first three quarters of this year, GM and Ford have lost a combined $30 billion; while sales through November for all three carmakers combined have declined 22% compared with the same period in 2007 -- that's nearly 1.7 million fewer cars and trucks sold in the United States. Chrysler, which is a private company, has not disclosed its financial results.
If the restructuring plans don't meet standards set out in the bill for demonstrating future viability, such as refinancing existing debt and becoming competitive with other automakers on costs and the types of vehicles produced, the government would be required to recall a company's loan, which would almost certainly trigger a bankruptcy filing.
The plans must be submitted by March 31, or by April 30 if the monitor agrees to an extension because workable plans are nearing completion.
The legislation would prohibit any additional federal money from going to the automakers if they failed to come up with an acceptable restructuring plan, but would open the door to longer-term government financing if they did.
The auto czar also would have veto power over any transactions exceeding $100 million by the companies while the loans were outstanding. Washington would receive ownership stakes in the companies.
And the bill contains a prohibition on stock dividends, restrictions on executive compensation and severance packages, and a requirement that companies receiving loans not own or lease private aircraft.
