GM, Ford Chrysler Should Get $25 Billion From TARP, Frank Says
General Motors Corp., Ford Motor Co. and Chrysler would get $25 billion in additional aid from the Treasury's financial-rescue plan under a proposal by House Financial Services Committee Chairman Barney Frank.
Legislation is needed to authorize the Treasury to use part of its $700 billion rescue fund for the auto industry, Frank said today. He scheduled a hearing on the measure for Nov. 19.
"The consequences of a collapse of the American automobile industry would be particularly troublesome," said Frank (D-Mass.).
Frank said the plan "will be written in a way that we are protected" and that ensures automakers cannot use the money "imprudently." He said they were still working on details of the plan.
Frank's plan to move ahead with aid for automakers came as some lawmakers questioned whether the package was necessary or fair.
Rep. Spencer Bachus of Alabama, the top Republican on Frank's committee, said a bailout would be unfair to competing car manufacturers and would only spur other industries to turn to lawmakers for financial assistance.
"Where does this stop?" Bachus said. "We started with financial services, we went from banks to insurance companies," he said. "Does it end with manufacturing? What about retail?"
In addition to passing through the Democratic-controlled House, any legislation must be approved by the Senate, where the minority Republicans can stall legislation through endless debate. There, the top Republican on the Banking Committee, Sen. Richard Shelby of Alabama, signaled that he opposes aid to automakers.
"The financial situation facing the Big Three is not a national problem, but their problem," Shelby said in a statement. "I do not support the use of U.S. taxpayer dollars to reward the mismanagement of Detroit-based auto manufacturers in such a way that allows them to continue and compound their ongoing mistakes."
House Speaker Nancy Pelosi said Tuesday she wants "immediate action" to give automakers additional assistance as shares of General Motors Corp. yesterday hit their lowest level since 1943 and analysts say the company faces possible bankruptcy. President George W. Bush hasn't yet said he would approve any further aid to those companies.
