"We're seeing a potential meltdown in the auto industry with consequences that could impact directly upon millions of American workers and cause further devastation to our economy," Reid told colleagues.
Under the Senate plan, the $25 billion in emergency loans would be available only to companies that have operated U.S. factories building automobiles or components for at least 20 years. That provision would exclude many foreign automakers with U.S. plants.
To get loans, companies would have to submit detailed plans on how they would use the money to ensure "long-term financial viability," stimulate U.S. production and "pursue the timely and aggressive production of energy-efficient advanced technology vehicles." The money would also come with limits on executive pay and a ban on stock dividends until the loans were repaid.
The House proposal was similar but would limit money to companies that have operated two or more auto manufacturing plants in the United States for the last 25 years. It also calls for the government to receive some stock options from the companies, and for tougher restrictions on executive compensation.
Instead of using the $700-billion financial rescue fund to help automakers, the White House has proposed easing rules on a $25-billion loan program approved by Congress last year to help Detroit retool factories so they can produce more fuel-efficient and environmentally friendly vehicles. Congressional Democrats say diverting that money would hurt U.S. automakers' efforts to become more competitive.
The $100-billion stimulus plan also includes a tax break for the purchase of a car before the end of next year, $300 million for research to speed development of electric vehicles and $1 billion to fund loan guarantees to encourage domestic manufacturing of advanced batteries that can power electric vehicles.
A growing number of lawmakers are seeking to impose conditions on auto industry aid.
Sen. Bill Nelson (D-Fla.) said Monday that the automakers should be required to increase the average fuel efficiency of their vehicles to 40 miles per gallon in 10 years or 50 miles per gallon by 2020, as well as increase production of electric, hybrid and alternative-fuel models.
"We've got to stop this kind of foot-dragging that has got them into the place that they're in," he said.
Sen. Jon Kyl (R-Ariz.), the second-ranking Republican in the Senate, expressed little sympathy for automakers.
"They're in trouble for reasons that relate to their own decisions," he said, suggesting they might be better off seeking to restructure their operations, including labor contracts, under bankruptcy protection.
--
richard.simon@latimes.com
jim.puzzanghera@latimes.com
