[Hurricane]

Democrats press for car industry rescue
By James Politi in Washington

Published: November 9 2008 13:48 | Last updated: November 9 2008 13:48

Democratic leaders in Congress this weekend called on the Treasury Department to consider assisting the ailing US car industry through the $700bn financial rescue plan enacted last month.

Following meetings with the big three carmakers – Ford, General Motors and Chrysler – on Thursday, Harry Reid, Senate majority leader, and Nancy Pelosi, House speaker, appear increasingly convinced of the need for large-scale government intervention to aid the industry.

In a letter to Hank Paulson, treasury secretary, sent on Saturday, Mr Reid and Ms Pelosi wrote: “We left the meetings convinced that our nation’s automobile industry – the heart of our manufacturing sector – and the jobs of tens of thousands of Americans are at risk”.

Emboldened by big Democratic gains in both the House and the Senate in last Tuesday’s election – as well as the victory of Barack Obama in the presidential race – Mr Reid and Ms Pelosi are asking the Treasury to consider whether carmakers would be eligible to receive assistance through the $700bn bailout plan, which was originally intended only for the financial services industry.

“Were you to determine that the automobile industry is eligible for assistance … we would urge you to impose strong conditions on such assistance in order to protect taxpayers and maximize potential for the industry’s recovery. An automobile industry that is forward-looking and focused on ingenuity, competitiveness, and the creation of green jobs for the future is essential to its long-term viability,” Ms Pelosi and Mr Reid wrote.

As conditions in the US economy have worsened in recent weeks, the Bush administration has been besieged by requests for assistance from a wide range of industries – which it has so far resisted.

Jennifer Zuccarelli, a Treasury spokeswoman, said: “We continue to work on a strategy that most effectively deploys the remaining funds to strengthen the financial system and get lending going on.”

Lawmakers and business groups are pushing for the Bush administration to aid the car industry in three ways. The first would be a faster disbursement of $25bn that were already appropriated for the carmakers to make energy efficient vehicles. The second is allowing the finance arms of the carmakers to participate in the capital purchase programme of the bailout bill. But the most dramatic move that many in Detroit are hoping for is a direct loan, possibly in exchange for equity or warrants.

Full text: http://www.ft.com/cms/s/0/1fc10c0e-a...077b07658.html

NOT to make this political - considering the news that is pushing the stock down so far today, this article is important.