The "Auto Industry Financing and Restructuring Act" is taking shape, as congressional Democrats have sent the White House a draft of its plan to aid to the struggling domestic auto industry. Up to $17 billion in loans, drawn from the $25 billion energy fund already approved for the automakers to retool their factories to make more fuel-efficient vehicles, is being considered for Chrysler and GM. Ford is seeking a $9 billion line of credit, but that will probably not be addressed until the Obama White House takes over in January.
In the plan, the President has the power to designate one or more officials to enforce the plan and report to Congress periodically. Earlier, there were talks of giving a single "Car Czar" complete control of the oversight process, with the power to force any of the companies accepting loans into bankruptcy if Congressional requirements were not being met. Congress seems to have trashed that idea, instead opting to let the President decide how oversight should be instituted.
Loans or lines of credit would be authorized to automakers that submitted restructuring plans to Congress on December 2nd. Loans would have terms of seven years, with 5 percent interest for the first five years and 9 percent for the last two years.
According to the plan, the automakers must submit a comprehensive restructuring plan detailing their path to long-term viability by March 31st. Companies would have to divest any interest in private passenger aircraft during the period of assistance, limit compensation of executives and prohibit golden parachutes. Payment of dividends would also be prohibited.
Any transactions worth more than $25 million must be flagged under the plan, and the oversight individual or board would have the power to veto those transactions. The companies would also be subject to review by Congress' General Accountability Office, which would have access to company information.
Congressional Democratic leaders are now waiting on a response from the White House regarding the new proposal.