WASHINGTON -- House Speaker Nancy Pelosi said she will push legislation next week to help the ailing auto industry.

"I am confident Congress can consider emergency assistance legislation next week during a lame-duck session, and I hope the Bush Administration would support it," the California Democrat said in a statement.

Rep. Pelosi said she tapped House Financial Services Chairman Barney Frank (D., Mass.) to craft legislation that would give the industry "limited" assistance under the recently enacted Troubled Asset Relief Program.

"In order to prevent the failure of one or more of the major American automobile manufacturers, which would have a devastating impact on our economy, particularly on the men and women who work in that industry, Congress and the Bush Administration must take immediate action," she said.

The speaker added the assistance would be conditioned on limits on executive pay, rigorous independent oversight and other taxpayer protections "to ensure that any companies that benefit from this assistance -- and not the taxpayers -- bear the full burden of repaying any costs that are incurred."

A companion effort is under way in the Senate.

Ms. Pelosi's statement didn't specify how large an aid package she prefers.

The speaker's decision comes a few days after General Motors Corp. warned it is rapidly running out of cash, and Ford Motor Co. announced its situation was only slightly better.

The plight of the industry has drawn attention from the White House and the incoming Obama administration. Last week, President-elect Barack Obama prodded the Bush administration to do more to help the industry, and on Monday, he raised the issue with President George W. Bush in an Oval Office conversation meant to underscore a smooth transition of power.

Before adjourning for the elections, Congress passed legislation providing for $25 billion in government-backed loans to the auto makers to prod them to retool their factories to make more efficient vehicles.

Since then, auto executives and officials in the United Autoworkers union have called for more than that to avert a possible collapse of one of the nation's most basic industries, including $50 million more to help cover future health-care payments for about 780,000 retirees and their dependents.

GM and Ford reported last week that they spent down their cash reserves by a combined $14.6 billion in the past three months. Ford said it would slash more than 2,000 white collar jobs.

The Senate is scheduled to meet next week in a post-election session, but until Ms. Pelosi issued her statement, it wasn't clear the House would follow suit.

The House already has passed legislation to provide additional unemployment insurance benefits for some of the growing ranks of the nation's jobless, as well as a separate measure to stimulate the economy. That meant the Senate could have passed either or both bills and sent them to the White House for Mr. Bush's signature without further action by the House.

Ms. Pelosi's announcement changed that, and raised the possibility of a post-election session that covers more areas.

The Bush administration, for example, has said that enactment of a free trade agreement with Colombia is its top priority in Congress.

Many Democrats oppose the proposed agreement as written. But it is unclear what, if any, compromise might be possible that would allow auto assistance and a trade agreement to be the last major measures signed into law by the outgoing president.

WASHINGTON – A key House Democrat is writing legislation that would send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are pressing for quick passage of an auto bailout during a postelection session of Congress that begins Tuesday.

The legislation being drafted by Democratic Rep. Barney Frank, chairman of the Financial Services Committee, would dip into the $700 billion Wall Street rescue money approved by Congress last month for the auto aid. President Bush is cool to that idea, although the White House says he is open to helping the troubled industry.

GM: General Motors to boost Wuling stake - WSJ [UPDATE]
2008-11-12 13:54:23.270 GMT

[ Live In Play]

GM: General Motors to boost Wuling stake - WSJ (2.92)
[Update]
WSJ reports the co is in talks to increase its stake in a Chinese joint
venture that makes small, inexpensive vans and trucks, people familiar with
the situation said. The U.S. car maker has entered into negotiations with the
government of Guangxi province in southwestern China to expand its stake in
SAIC GM Wuling Automobile, said Hu Maoyuan, chairman of Chinese car maker
Shanghai Automotive Industry, the majority partner in the joint venture. The
move, according to people close to GM, is aimed at consolidating GM's
ownership of Wuling and integrating it more into the GM group as it tries to
use Wuling as a launching pad to get low-cost cars into other fast-growing
emerging markets. Mr. Hu said Shanghai Automotive, which owns 50.1% of the
Wuling venture, wasn't involved in the talks. GM now owns 34% of Wuling.
State-owned Liuzhou Wuling Motors owns the remainder, and GM apparently would
be buying some of that stake. An official at the Guangxi State-Owned Assets
Supervision and Administration Commission, the regional government agency that
owns Liuzhou Wuling, confirmed that it is in talks with GM, but wouldn't
elaborate.

Briefing.com, Inc.

House Speaker Nancy Pelosi's plan to aid troubled U.S. automakers threatens to spark a final clash with President George W. Bush before he leaves the White House in January.

Pelosi said yesterday she wants ``immediate action'' to give automakers additional assistance as shares of General Motors Corp. hit their lowest level since 1943 and analysts said the company faces possible bankruptcy. Bush hasn't said he would approve any further aid to those companies. Richard Shelby, the Senate Banking Committee's top Republican, opposes the measure.

Senate Democratic leader Harry Reid made clear the bill's prospects of winning passage in this month's ``lame duck'' session rely on help from both congressional Republicans and Bush. Democratic gains in both chambers from the Nov. 4 elections won't go into effect until the new Congress convenes on Jan. 6. President-elect Barack Obama takes office two weeks later.....

Last September, I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?

How could these companies be so bad for so long? Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it. It led to a situation whereby General Motors could make money only by selling big, gas-guzzling S.U.V.’s and trucks. Therefore, instead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers.

This included striking special deals with Congress that allowed the Detroit automakers to count the mileage of gas guzzlers as being more than they really were — provided they made some cars flex-fuel capable for ethanol. It included special offers of $1.99-a-gallon gasoline for a year to any customer who purchased a gas guzzler. And it included endless lobbying to block Congress from raising the miles-per-gallon requirements. The result was an industry that became brain dead.....

Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it.

United States President-elect Barack Obama is apparently mulling creation of a so-called “auto czar” to be placed in charge of emergency federal aid to Detroit’s automakers, as well as overseeing the tough corporate reforms he says the government would put on the automakers and ensuring that taxpayers would receive return on their investment in the industry.

Obama’s team hasn’t identified any potential auto czar names, though he does have three people on his transition staff designated as automotive industry advisers: Economic adviser Jason Furman, Georgetown University law professor Dan Tarullo and former Clinton Treasury official Joshua Steiner, reports the Detroit News.

As is by now well known throughout the industry, Michigan governor Jennifer Granholm and former Michigan congressman David Bonior are helping to advise Obama - both have substantial auto industry experience.

Obama apparently raised the idea of what he called an “auto czar” during his meetings with President George W. Bush on Monday.

The automotive industry point-person would oversee the implementation of the loans that Obama and most Democrats favor providing to the industry. The unnamed person would also likely work directly with the federal agencies that deal with automakers, like the Treasury, Labor and Transportation departments and the Environmental Protection Agency, according to Center for Automotive Research chairman David Cole.

Labor cost per hour, wages and benefits for hourly workers, 2006.

Ford: $70.51 ($141,020 per year)

GM: $73.26 ($146,520 per year)

Chrysler: $75.86 ($151,720 per year)

Toyota, Honda, Nissan (in U.S.): $48.00 ($96,000 per year)




Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D. (see graph above, click to enlarge), and 52.6% more than the average worker at Toyota, Honda or Nissan.

General Motors, Ford, Chrysler and the United Auto Workers union are pouring millions of dollars into a lobbying campaign for a taxpayer bailout.

The money devoted to influence peddling in Washington would be better spent on improving quality and finding ways to reduce a bloated cost structure, but both management and UAW have decided that fleecing taxpayers is a better option.

A taxpayer bailout would be a terrible mistake. It would subsidize the shoddy management practices of the corporate bureaucrats at General Motors, Ford and Chrysler, and it would reward the intransigent union bosses who have made the synonymous with inflexible and anti-competitive work rules.

Perhaps most important, though, is that a bailout would be bad for the long-term health of the American auto industry. It would discriminate against the 113,000 Americans who have highly-coveted jobs building cars for Nissan, BMW and other auto companies that happen to be headquartered in other nations.....

So it's come to this: General Motors, once the world's mightiest industrial enterprise, is now flirting with bankruptcy. Ford and Chrysler may not be far behind. Car and truck sales have collapsed. GM is rapidly exhausting its cash reserves and may soon be unable to pay its bills. Here's the dilemma: GM and other U.S. automakers ought to be rescued to minimize damage to the economy, but the rescue should require tough conditions that neither the Democratic Congress nor the incoming Obama administration seems willing to support.

In a booming economy, a GM bankruptcy might be tolerable and useful. It would remind everyone of the social costs of mediocre management and overpriced unionized labor. But far from booming, the economy is declining at an apparently accelerating rate. Confidence among small businesses has dropped to a 28-year low, according to a survey released last week by the National Federation of Independent Business.

No one knows what further havoc a GM bankruptcy might inflict. A study by the Center for Automotive Research (CAR) estimates that 2.5 million jobs would be lost in the first year. The logic: if any of the "Big Three" went bankrupt, many suppliers would also fail; because car companies share suppliers, all U.S.-based manufacturers would suffer crippling parts shortages. American production would virtually stop until new supplier arrangements emerged. "It takes 6,000 to 14,000 parts to make a vehicle," says Sean McAlinden, CAR's chief economist. "If you don't have one, you can't make it."

This may be too pessimistic. In a Chapter 11 bankruptcy, GM would "reorganize." It would suspend many existing debt payments and continue normal operations. Perhaps. The snag is that even in "reorganization," GM would require new loans and these might not be available. "Historically, when companies go bankrupt, there's 'debtor in possession' financing—investors lend you money, but they get repaid first. That market has evaporated because of the credit crunch," says auto analyst Rod Lache of Deutsche Bank. No loans, no production. Another possible pitfall: worried about warranties and service, customers might shun a bankrupt GM's vehicles.

Why run these risks when the 6.5 percent unemployment rate seems headed toward 8 percent and almost a quarter of the 10 million jobless have been out of work for six months or longer? Just to satisfy a purist "free market" ideal? It doesn't make sense. But neither does it make sense simply to heave taxpayers' money at automakers. The objective is not to rescue the companies or workers; it is to shore up the economy and improve the U.S. industry's competitiveness. A bailout won't succeed unless other things also happen.....

It says much about these times when comedians offer better insights than our elected leaders. ``Tonight Show'' host Leno and his ilk are poking fun at an industry that was once the pride and joy of the world's biggest economy. It also says much when folks in Seoul repeat his jokes over a few beers, as many are these days. Henry Ford probably never envisioned U.S. autos becoming a global punchline.

``I saw a guy on Hollywood Boulevard say to a hooker `What can I get for an extra 50?' She said `100 shares of General Motors,''' Leno joked last month.....