Frank unveils proposal to loan automakers $25b
WASHINGTON - General Motors Corp., Ford Motor Co., and Chrysler LLC would get $25 billion in loans 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 yesterday. He said he plans to unveil the bill Nov. 18 and hold a hearing on the measure the following day.
"A collapse of the American automobile industry would be the worst possible thing that could happen at a time when we are already weakened," Frank, a Massachusetts Democrat, said.
Passage of an industry bailout plan may keep GM from running out of operating cash by year's end, which it says may happen without US help. GM had $16.2 billion on hand as of Sept. 30, down from $21 billion at the end of June, and said it needs at least $11 billion to pay its monthly bills.
"We're not asking the taxpayers to throw good money after bad," Frank said. There will be "protections about getting it repaid," he said, adding that it was too early to discuss bill details. "The consequences of not doing it will be worse."
GM is the second-biggest provider of private healthcare benefits and was the third-biggest advertiser in this year's first half. Job losses would total 2.5 million from an automaker failure in 2009, according to a Nov. 4 study by the Center for Automotive Research in Ann Arbor, Mich.
President Bush hasn't said he would approve any further aid to auto companies. Frank said in the interview he believes Bush will sign the legislation.
"Chairman Frank doesn't speak for the White House," spokesman Tony Fratto responded when asked about Frank's remark.
Frank's plan to move ahead with aid for automakers came as some lawmakers questioned whether the package was necessary or fair.
Representative Spencer Bachus of Alabama, the top Republican on Frank's committee, said a bailout would be unfair to competitors and would spur other industries to turn to lawmakers for financial assistance.
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, Senator 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. 