Forty-three democrats and ten republicans voted for a bill last night that would lend billions of dollars to ailing domestic auto companies-seven short of the sixty votes needed. Republican senators have been strongly against the bill, even with the Bush administration working to win them over.
A version of the bill, which seeks to provide GM and Chrysler with a combined $14 billion in short-term loans if they meet specific demands, was easily pushed through the House yesterday. Despite the easy win in the House, trouble had been brewing for the legislation since Wednesday, when Senate Republicans held a lunch meeting with White House officials to voice their opposition to the bill.
Senator Bob Corker, R-Tennessee, who was initially one of the most vociferous proponents of bankruptcy for the companies, presented his own alternative bill to aid GM and Chrysler late last night. Corker was prompted to come up with the legislation after speaking with industry and UAW leaders.
While still opposed to the House version of the legislation, Corker devised his own plan, which would have required the Detroit three to convert two-thirds of their creditor's debt to equity by March 31, 2009. Failure to do so would have result in bankruptcy. The plan also sought to force UAW workers to accept reduced pay.
The largest obstacle to the success of the bill appears to have been the dispute over when UAW workers should have their wages reduced to match nonunion workers employed by foreign car manufacturers like Toyota and Honda. "We were three words away" from an agreement, Senator Bob Corker, R-Tennessee said last night. According to Corker, workers would not accept a 2009 deadline for the wage reduction. The UAW agreed to the reduction, but seeks to keep its current contract until it runs out in 2011.
Shares in automotive companies and suppliers plummeted overnight as news of the bill's death travelled around the world. Shares of GM, Chrysler, Ford and Toyota all dropped significantly. Congressional Democrats are once again calling on the White House to tap into the $700 billion bailout fund initially conceived for the financial sector. If GM and Chrysler can make it to January, it is more likely another aid bill could be passed when the new Congress convenes on January 6.
Source: Automotive News