U.S. Auto Chiefs Appeal to Congress for Emergency Aid

The Big Three automakers renewed their plea for an emergency federal bailout, as the head of General Motors Corp. told a deadlocked Congress the industry has made some wrong turns and economic forces have pushed it “to the brink.”

GM Chief Executive Rick Wagoner said time is running short and his company could be out of funds by the end of the year. “We’re here today because we made mistakes,” he said in written testimony to the Senate Banking Committee in Washington. “And we’re here because forces beyond our control have pushed us to the brink.”

Wagoner, Chrysler LLC Chief Executive Robert Nardelli and Ford Motor Co.’s Alan Mulally are asking for as much as $34 billion in federal aid. “I am sorry to be asking for this support,” Wagoner told reporters before the hearing began.

The three men are trying to recover from their appearance before Congress two weeks ago when they were ridiculed for arriving in Washington in separate private jets to plea for funds and left empty-handed. They demonstrated contrition today, pledging to work for $1 a year, traveling to Washington by car and providing specific plans for viability.

“We need to act,” said Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat. Letting automakers fail would amount to playing “Russian roulette with our entire economy.”

Senator Charles Schumer, a New York Democrat, said that if the industry fails, “millions of workers lose their jobs.”

Opposing a Bailout

The senior Republican on the panel, Senator Richard Shelby of Alabama, said he still opposes a bailout. “Each of the automakers have based their plans on what I believe are optimistic sales forecasts,” he said.

Democrat Senator Carl Levin, from the carmakers’ home state of Michigan, said “it’s essential” that President George W. Bush and President-elect Barack Obama “become more active” in talks to rescue the carmakers.

White House spokeswoman Dana Perino said it is up to the automakers to show that their plans for revamping their companies will work.

“It’s too early to give these plans a grade,” Perino said. “The linchpin of our support has been that we would not provide taxpayer dollars unless they could prove viability.”

GM and Chrysler say they need the first installments on a rescue package this month to avoid running out of cash. Ford has requested a $9 billion credit line it said it may not need to tap.

Public Money

“I recognize this is a significant amount of public money,” Nardelli said in written testimony. “We believe this is the least costly alternative considering the depth of the economic crisis and the options we face.”

U.S. lawmakers have said they may schedule votes next week to aid automakers after hearings today and tomorrow. Leaders haven’t resolved a deadlock over how to provide aid, with Republicans backing use of Energy Department loans that were intended to help retool the industry and Democrats preferring to tap a $700 billion rescue package targeted for financial institutions.

“The collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford’s top dealers also own GM and Chrysler franchises,” Mulally said.

GM and Chrysler executives have held private discussions on possibly accepting a pre-arranged bankruptcy as the last-resort price of securing the bailout, according to a person familiar with the talks.

Leading to Liquidation

The executives have said publicly that bankruptcy would lead to liquidation as customers abandon the companies. Wagoner said today bankruptcy isn’t in his plan.

Staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy -- negotiated with workers, creditors and lenders -- could be used to reorganize the industry without liquidation, a person familiar with that matter said.

“The situation at GM, Ford and Chrysler is extremely dire,” United Auto Workers President Ronald Gettelfinger said in written testimony. “It is imperative that the federal government act this month.”

Gene Dodaro, acting comptroller of Congress’s Government Accountability Office, said lawmakers should consider creating a board to oversee distribution of any aid the car companies receive. Any money could be phased in over time, he said.