Rep. Frank: Passable Auto Bailout Bill by Next Week
Rep. Barney Frank (D-Mass.) just wrapped up a five-and-a-half-hour(!) hearing of his Financial Services committee, mulling over a proposed $34 billion bailout of the struggling auto industry.
At the hearing's conclusion, Frank said he has "more optimism than before" that Congress would craft some sort of relief bill by next week, which means lawmakers will be working throughout the weekend.
"If we are lucky, we will come out with a bill next week that nobody likes," Frank said, "because if any one individual likes the bill, it can't pass."
Lawmakers must now decide how much of a game of chicken they want to play with the White House.
Congress has continually said that it is within the scope of the $700 billion rescue/bailout package, and within the administration's authority, to use that money to bail out Detroit. Congress's view got backing today from at least one notable economist, Columbia University Prof. Jeffrey Sachs, who said an autos bailout would be an appropriate use of the already-approved bailout.
But the administration has steadfastly refused to use bailout money on the autos, saying it's best spent on stabilizing the financial system. The White House wants Congress to rejigger the language in the $25 billion in direct loans already approved to help Detroit modernize its factories to allow the automakers to use the money as bridge loans to stay in business.
In the middle of this game of chicken are GM, Ford and Chrysler, two of which -- GM and Chrysler -- have said, essentially, if we don't get a few billion by the end of the month, we may go out of business.
So Congress's choice is:
a) Capitulate to the administration's request and rewrite the language in the factory-upgrade bill or
b) Buck the White House and pass a new autos relief bill that President Bush may refuse to sign.
Of course, the Federal Reserve could step in at any moment and make loans to the Big Three collateralized by their billions in assets. But that's sort of like diving into an empty swimming pool hoping someone's going to fill it up with water before you hit the bottom.
Either way, it's going to be a long weekend for all concerned.
December 5, 2008; 3:47 PM ET
Categories: The Ticker | Tags: Chrysler, Ford, GM, General Motors, Treasury, automakers, bailout
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