Big 3 fail to close deal on bailout

The chief executives -- GM's Rick Wagoner, Ford's Alan Mulally and Chrysler's Robert Nardelli -- said they had renegotiated their union contracts, started producing more fuel-efficient and alternative-energy vehicles, and were on the road to success until the financial crisis hit. Without emergency loans, the companies could be forced into bankruptcy, causing as many as 3 million workers with ties to the industry to lose their jobs.

"Helping the auto industry bridge the current financial crisis will not only prevent massive economic dislocation now, it will produce enormous benefits for our country later," Mulally said.

Financial Services Committee Chairman Barney Frank (D-Mass.) has proposed extending $25 billion in loans from the $700-billion rescue fund. The loans would be repaid with interest and come with stock options, limitations on executive compensation and oversight by a government board that could veto any company expenditures of more than $25 million.

Frank said there was a double standard by some lawmakers who have criticized the Big Three for paying their union workers more than U.S. employees who work for foreign automakers, whose plants are usually non-union.

A study by a University of Michigan professor found that average hourly pay for a Big Three worker in 2007-08 was $73.20, compared with $48 for a Toyota worker.

But Alan Reuther, legislative director for the United Auto Workers, said those costs include retiree benefits that are ending. Union and company officials said the pay differences between U.S. and foreign automakers would virtually be eliminated when the new contract terms took effect in 2010.

And Frank said the lawmakers who criticized union pay scales didn't raise questions about the salaries of average employees of financial institutions, such as insurance giant American International Group, that got bailout money.

"I think the average AIG worker gets a good deal more than the autoworkers," Frank said. "There is apparently a cultural conditioning that's more prepared to accept aid to the white-collar industry than to the blue-collar industry."

But it was the white collars of the CEOs that became the focus of the hearing. Only Nardelli agreed to reduce his own salary to $1. And news of their travel to Washington on private jets riled their listeners. None of the three top executives raised a hand when asked if their flights were on commercial carriers.

Rep. Patrick T. McHenry (R-N.C.) said flying to Washington on expensive private jets was "a bit arrogant before you ask the taxpayers for money."

"Those type of symbolic things, they really matter, they set a tone," said Rep. Peter Roskam (R-Ill.).

All three companies said they required their chief executives to fly on private planes for security reasons. None would identify the type of plane used or the number of people who traveled to Washington.

GM and Ford have corporate jets. Chrysler does not, but uses leased or chartered planes.

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jim.puzzanghera@latimes.com

richard.simon@latimes.com