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Pelosi calls for US auto bail-out Pelosi calls for US auto bail-out
(about 2 hours later)
House of Representatives Speaker and leading Democrat Nancy Pelosi has called on the US government to bail out the country's beleaguered car industry.House of Representatives Speaker and leading Democrat Nancy Pelosi has called on the US government to bail out the country's beleaguered car industry.
Plummeting sales, tight credit and a looming recession have left some of the biggest US car manufacturers fighting for their lives.Plummeting sales, tight credit and a looming recession have left some of the biggest US car manufacturers fighting for their lives.
Ms Pelosi wants carmakers to get some of the $700bn financial bail-out package agreed by Congress in October. Ms Pelosi wants carmakers to get some of the $700bn (£494bn) financial bail-out deal agreed by Congress in October.
US Treasury Secretary Hank Paulson is giving an update on the package later. US Treasury Secretary Henry Paulson is giving an update on the package later.
As things stand, carmakers are not eligible to apply for this money.As things stand, carmakers are not eligible to apply for this money.
Ms Pelosi is urging the incumbent administration to take a more sympathetic line.Ms Pelosi is urging the incumbent administration to take a more sympathetic line.
The US is embracing a form of state control and intervention that looks remarkably Chinese Robert Peston, BBC Business Editor Read Robert Peston's blog in fullThe US is embracing a form of state control and intervention that looks remarkably Chinese Robert Peston, BBC Business Editor Read Robert Peston's blog in full
She said: "In order to prevent the failure of one or more of the major American automobile manufacturers. Congress and the Bush administration must take immediate action." She said: "In order to prevent the failure of one or more of the major American automobile manufacturers, Congress and the Bush administration must take immediate action."
There is, however, a great deal of opposition to a bail-out for the car industry.There is, however, a great deal of opposition to a bail-out for the car industry.
"Once we cross the divide from financial institutions to individual corporations, truly, where would you draw the line?" said Jeff Sessions, Republican Senator for Alabama."Once we cross the divide from financial institutions to individual corporations, truly, where would you draw the line?" said Jeff Sessions, Republican Senator for Alabama.
Massive lossesMassive losses
The call for help comes after General Motors (GM) announced a third-quarter operating loss of $4.2bn (£2.73bn) last week. The carmaker said it would run out of cash early in 2009 if market conditions did not improve.The call for help comes after General Motors (GM) announced a third-quarter operating loss of $4.2bn (£2.73bn) last week. The carmaker said it would run out of cash early in 2009 if market conditions did not improve.
GM also announced it would be forced to lay off 3,600 workers, and has since announced a further 1,900 job cuts.GM also announced it would be forced to lay off 3,600 workers, and has since announced a further 1,900 job cuts.
Last week, Ford also reported a $2.98bn loss for the third quarter, and said it would have to cut salary-related expenses in North America by 10%.Last week, Ford also reported a $2.98bn loss for the third quarter, and said it would have to cut salary-related expenses in North America by 10%.
Sales at the two car giants have been hit hard as consumers tighten their belts for the impending recession. Sales at GM fell by 45% in October compared with the same month last year, while sales at Ford fell 30%.Sales at the two car giants have been hit hard as consumers tighten their belts for the impending recession. Sales at GM fell by 45% in October compared with the same month last year, while sales at Ford fell 30%.
Chrysler was also hit hard, with sales falling 35%.Chrysler was also hit hard, with sales falling 35%.
Pollution reductionPollution reduction
At the start of October, President George W Bush signed legislation that gives GM and fellow US carmakers Chrysler and Ford access to $25bn of cheap government-backed loans to help them develop less-polluting cars.At the start of October, President George W Bush signed legislation that gives GM and fellow US carmakers Chrysler and Ford access to $25bn of cheap government-backed loans to help them develop less-polluting cars.
Reports suggest that some of the $700bn bail-out package for the financial services sector may, in fact, be made available to the finance arms of some US carmarkers.Reports suggest that some of the $700bn bail-out package for the financial services sector may, in fact, be made available to the finance arms of some US carmarkers.
US Treasury Secretary Hank Paulson is holding a news conference on Wednesday in which he will give an update on the US financial rescue package. He may also give some indication of a possible bail-out of the car industry. US Treasury Secretary Henry Paulson is holding a news conference on Wednesday in which he will give an update on the US financial rescue package. He may also give some indication of a possible bail-out of the car industry.