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Congress to vote on car bail-out US House backs car industry plan
(about 7 hours later)
The US House of Representatives could vote on a $15bn (£10bn) bail-out of the US car industry as soon as Wednesday. The US House of Representatives has approved a $15bn (£10bn) bail-out of the US car industry.
The White House and leading Congressional Democrats have reached broad agreement on the rescue package for the "Big Three" US car firms. The vote came after the White House and leading Democrats reached broad agreement on the rescue package.
Administration officials say the tentative agreement covers key points but details still need clarification. The bail-out could be delayed as it faces stiff opposition from Republicans in the Senate, where the Democrats have a razor-thin majority.
While the House may schedule a vote on Wednesday, the measure could be held up for longer in the Senate. General Motors and Chrysler say they risk ruin without immediate aid. Ford says it may need funds in the future.
While the Democrats have a comfortable majority in the House of Representatives, they only have a majority of one in the current lame-duck Senate, so the bill may struggle to get through without extensive amendment. The legislation would provide loans to car makers to keep them in business over the coming months.
"We want to complete this as soon as possible," said Harry Reid, Democratic majority leader in the Senate. It would also see the appointment of a "car tsar", named by President George W Bush, to oversee the money, and with the power to force the automakers into bankruptcy if they did not restructure their businesses to become viable.
"The American people want us to make a decision." The government is also expected to take non-voting shares in General Motors, Ford and Chrysler.
'Car Tsar' The "Big Three" automakers have until 31 March to submit plans to the "car tsar" detailing how they intend to restructure to ensure their longer-term survival, the Associated Press news agency said.
General Motors and Chrysler say they risk ruin without immediate aid, while Ford says it may need funds in the future. The three firms had called for $34bn between them when their bosses recently went before Congress to put their case.
'Weak bill'
Democratic House Speaker Nancy Pelosi said the measures would act as "a jumpstart for an industry and our country's economic health".
"It is a test," she said after the House passed the bill by 237-170. "And we will soon see in a matter of weeks if the executive suites in Detroit are willing to make the choices" offered by the bail-out package.
The bosses of Ford, GM and Chrysler had been seeking more moneyThe bosses of Ford, GM and Chrysler had been seeking more money
President George W Bush is said to want strict conditions attached to any agreement to bail out the firms, including tough oversight for the three carmakers to ensure that the money is accompanied by sound financial recovery plans. White House spokeswoman Dana Perino said: "We believe the legislation developed in recent days is an effective and responsible approach to deal with troubled automakers and ensure the necessary restructuring occurs."
Senate Republicans have promised to oppose the bill.
"People realise that this bill is an incredibly weak bill [and] is the product of an administration that wants to kick the can down the road and let somebody else deal with it," said Tennessee Senator Bob Corker.
Republicans are said to prefer a plan that would demand concessions from auto-workers, encourage the car firms to declare bankruptcy and provide a system of government insurance that would protect private investment in the firms.
This follows criticism that the $700bn bail-out of the financial sector was insufficiently detailed.This follows criticism that the $700bn bail-out of the financial sector was insufficiently detailed.
Under the proposal, the government is expected to take non-voting shares in General Motors, Ford and Chrysler.
The government is also expected to appoint of a "Car Tsar" to oversee the use of the money.
The three firms had been calling for $34bn between them, and their bosses recently went before Congress to put their case.
'Disappointed''Disappointed'
GM, Ford and Chrysler have all seen sales fall sharply this year in their home market.GM, Ford and Chrysler have all seen sales fall sharply this year in their home market.
While this decline reflects an industry-wide fall that has also hit European and Japanese carmakers in the US, the Big Three have also been criticised for not offering an attractive range of vehicles.While this decline reflects an industry-wide fall that has also hit European and Japanese carmakers in the US, the Big Three have also been criticised for not offering an attractive range of vehicles.
They have been said to be too slow in responding to the growing popularity of smaller, more fuel-efficient vehicles.They have been said to be too slow in responding to the growing popularity of smaller, more fuel-efficient vehicles.
GM admitted on Monday that it had "disappointed" American consumers by letting "our quality fall below industry standards and our designs became lacklustre".GM admitted on Monday that it had "disappointed" American consumers by letting "our quality fall below industry standards and our designs became lacklustre".