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US carmakers' plea under scrutiny Aid for US carmakers now 'urgent'
(about 4 hours later)
Bosses from America's big three car companies face a second day of grilling in Congress over their request for a multi-billion dollar bailout. The latest bleak US unemployment figures makes helping the big three car firms even more urgent, a leading politician has warned.
The chiefs of GM, Ford and Chrysler have already faced scepticism from US lawmakers as to whether $34bn (£23bn; 26.6bn euros) in aid would work. Bosses from GM, Ford and Chrysler, are being grilled by Congress for a second day over their request for a bailout.
On Friday the House financial services committee will hear their plea. The committee chairman, Democrat Barney Frank, warned his colleagues that to do nothing "would be a disaster".
President George W Bush has said "we don't want to put good money after bad" no matter how key the auto industry is. The carmakers have already faced opposition to their plea for a $34bn (£23bn; 26.6bn euros) rescue plan.
The House financial services committee chairman, Democrat Barney Frank, has called on President-elect Barack Obama to be rather more assertive on the issue than he has been so far. US companies axed 533,000 jobs in November, the most in 34 years. The unemployment rate rose to 6.7% from 6.5% in October.
Mr Frank said the data showed that helping the troubled car industry had become a greater priority.
"For us to do nothing, to allow bankruptcies and failures in one or three of these companies in the midst of the worst economic situation since the Great Depression, it would be an unmitigated disaster."
But he said the US was being "held hostage" by the debate raging over how to help Detroit's carmakers.
No agreement
In a statement at the White House, President Bush said he was "concerned about the viability of the automobile companies".
"Likewise I am concerned about taxpayers' money being provided to those companies that may not survive," he said.
The President said it was important the Congress acted next week on a rescue plan for the car industry, and he emphasised it was important to ensure that government aid was paid back by the car firms.
GM said on Friday it would lay off 2,000 more workers early next year in the US, because of falling car sales.
Broad consensus exists between Congress and the Bush administration that the carmakers need help, but officials have so far been unable to reach agreement on how to do it, with some lawmakers opposed to doing anything at all.
DETROIT'S BIG THREE US November car sales compared with a year earlier: GM: down 41% to 154,877Ford: down 30% to 118,818 (excluding Volvo)Chrysler: down 47% to 85,260 Why are the big carmakers in trouble?
The White House does not want to use any of the banks' $700bn bailout, saying that this money is intended only to help stabilise the financial sector.
It wants to help the car firms with $25bn from a programme to promote fuel-efficient technologies.
However, congressional Democrats oppose this and insist the money should come from the bank rescue fund, known as the Troubled Asset Relief Programme (TARP).
Admitting mistakesAdmitting mistakes
The appearance of the three executives in Washington is the second time they have appealed to government for help - just two weeks ago Congress rejected their request for a $25bn loan.The appearance of the three executives in Washington is the second time they have appealed to government for help - just two weeks ago Congress rejected their request for a $25bn loan.
In a show of contrition and prudence, this time the men abandoned their private jets and drove to Washington in hybrid cars.In a show of contrition and prudence, this time the men abandoned their private jets and drove to Washington in hybrid cars.
DETROIT'S BIG THREE US November car sales compared with a year earlier: GM: down 41% to 154,877Ford: down 30% to 118,818 (excluding Volvo)Chrysler: down 47% to 85,260 Why are the big carmakers in trouble?
But their sense of urgency has only heightened, with General Motors boss Rick Wagoner warning that without help the company could go under within weeks.But their sense of urgency has only heightened, with General Motors boss Rick Wagoner warning that without help the company could go under within weeks.
The chief executives of Ford and GM have even offered to work for $1 a year if Congress approves the emergency aid. The three bosses have warned of collapse without a bailoutThe chief executives of Ford and GM have even offered to work for $1 a year if Congress approves the emergency aid.
On Thursday, Mr Wagoner and his Ford counterpart Alan Mulally admitted making mistakes in the way that they have run their businesses.On Thursday, Mr Wagoner and his Ford counterpart Alan Mulally admitted making mistakes in the way that they have run their businesses.
"We are here today because we made mistakes, and because circumstances beyond our control pushed us to the brink," Mr Wagoner told the Senate banking committee, referring to the global economic downturn. "We are here because we made mistakes, and because circumstances beyond our control pushed us to the brink," Mr Wagoner told the Senate banking committee, referring to the global economic downturn.
Chrysler boss Bob Nardelli said that Chrysler had lost $16bn of revenue as a result of plunging car sales this year alone.Chrysler boss Bob Nardelli said that Chrysler had lost $16bn of revenue as a result of plunging car sales this year alone.
Mr Mulally admitted that Ford had "produced more vehicles than our customers wanted, then slashed prices".Mr Mulally admitted that Ford had "produced more vehicles than our customers wanted, then slashed prices".
Scepticism
The three bosses warned of collapse without a bailout
The carmakers argued that the collapse of any one of them would have disastrous effects on the whole US economy.The carmakers argued that the collapse of any one of them would have disastrous effects on the whole US economy.
Despite the warning and the view of the committee's chairman Chris Dodd that inaction was not an option, Thursday's six-hour hearing ended without consensus.
There was plenty of scepticism, mostly from Republicans, reinforced by President Bush who said that any bailout must ensure the companies' long-term viability.
Mr Wagoner, Ford's Alan Mulally and Chrysler boss Bob Nardelli all blamed the US recession for decimating sales and leaving their companies in desperate need of cash.Mr Wagoner, Ford's Alan Mulally and Chrysler boss Bob Nardelli all blamed the US recession for decimating sales and leaving their companies in desperate need of cash.