DETROIT (AdAge.com) -- The Auto Industry Financing and Restructuring Act now faces an uphill vote in the U.S. Senate, after the U.S. House of Representatives voted 237 to 170 last night to approve the bill granting emergency funds to Detroit's car companies.
Speaker Nancy Pelosi called the bill "a jump start for an industry that is essential to our country's economic health," and not "life support to sustain a dying industry." She said in her plea on the House floor last night that the legislation is based on "tough love for an industry whose success is essential to our economic success; whose jobs are important to our work force; whose innovation is essential to our progress; and whose manufacturing, technological and industrial base is also essential to our national security."
The bill calls for emergency loans totaling $15 billion; no bonuses for the top-wage-earning executives and no golden parachutes or corporate jets. Any auto company that gets a loan must restructure or pay back the loan. A car czar will oversee the loans and can pull them back if companies don't act in good faith.
'Bridge to the future'
Rep. Sander Levin, D-Mich., who voted in favor of bill, said it "provides the domestic auto industry with a critical bridge to the future" along with "rigorous oversight" of the domestic auto industry. He challenged senators to rise to the occasion as several Republican senators have publicly denounced the federal loans to Detroit. "Now the Senate must act and avoid devastation to an economy already in recession."
General Motors Corp. thanked the House for its bipartisan vote in a prepared statement and added, "We encourage the Senate to act soon so that we can continue at full speed on the restructuring and advanced technologies plans that will form a stronger, more viable GM."
Meanwhile, both President Bush and President-elect Barack Obama went into serious spin mode to support the bailout bill. At a Chicago news conference today, Mr. Obama warned that letting automakers go bankrupt was not an option. "Our auto industry is struggling, threatening the jobs, health care and pensions of not just thousands of American autoworkers, but dealers, suppliers and others all across America, " he said.
While making clear that he would have preferred it if car companies had moved quicker to adopt new technologies and a new business approach, he said the country has no choice about what to do. "At this moment of great challenge for our economy, we cannot simply stand by and watch this industry collapse," he said. "Doing so would lead to a devastating ripple effect throughout our economy."
Back at the White House, press secretary Dana Perino said that President Bush would spend much of the day urging Republican senators to back the bailout. "We're going to spend our day today trying to convince them that this is the most effective and reasonable approach," she said.
Asked whether a bailout would only postpone the inevitable by a few months, Ms. Perino said, "I don't think that the companies think that they have a few months. That's why we are trying to act now."
She added: "If we don't act, and these companies go away, we could wake up and not have any domestic auto industry, which is certainly not the outcome that this president wants, and I would think that most members on Capitol Hill don't want it either."