Negotiations in the US Senate to try to secure Republican backing for the $14bn (£9.4bn) car industry bail-out have collapsed, senior Democrats have said.
A $14bn (£9.4bn) bail-out package for the beleaguered US car industry has died in the Senate after failing to get enough support in a procedural vote.
Senate Majority Leader Harry Reid said representatives of the United Auto Workers union had refused to accede to Republican demands for swift wage cuts.
The failure came after bipartisan talks on the rescue plan collapsed over Republican demands that the United Auto Workers union agree to swift wage cuts.
Sen Reid said the Senate would attempt to proceed with a Democratic-sponsored plan, but predicted it would not pass.
A White House spokesman said it was disappointed Congress had "failed to act" and would "evaluate its options".
The House of Representatives passed the White House-backed bill on Wednesday.
The House of Representatives passed the White House-backed bill on Wednesday.
The Democrats need some Republicans to back the bill in the Senate as they have a majority of just one, and some in their own party are expected to vote against.
The Democrats need some Republicans to back the bill in the Senate as they have a majority of just one, and some in their own party are expected to vote against.
The White House has described the proposed legislation, which would provide loans to the country's three main car makers - General Motors, Ford and Chrysler - as an effective and responsible approach.
'Three words away'
It said many Republicans and Democrats agreed that a disorderly bankruptcy could be fatal to the car makers and have a devastating impact on jobs, families and the US economy.
The BBC's Andy Gallacher in Washington says it was always going to be a battle to get the US Senate to approve the $14bn bridging loan.
General Motors and Chrysler say they risk ruin without immediate aid. Ford says it may need funds in the future.
I dread looking at Wall Street tomorrow - it's not going to be a pleasant sight Senate Majority Leader Harry Reid
The atmosphere in the Senate was tense and at times emotional, as the Democrats made last minute pleas to get their Republican counterparts to vote in favour of helping America's biggest car makers.
The Senate majority leader, Harry Reid, said he was "terribly disappointed" when it was clear the vote had collapsed, calling it a "a loss for the country".
"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight," he said.
"Millions of Americans, not only the auto workers but people who sell cars, car dealerships, people who work on cars are going to be directly impacted and affected."
The news brought a sharp fall in share prices in Japan, Taiwan, South Korea and Australia.
We were about three words away from a deal - we solved everything substantively and about three words keep us from reaching a conclusion Bob CorkerRepublican senator
Sen Reid said there had been too many differences between the Democratic and Republican representatives.
The Republicans left the closed-door meetings after refusing to give the car makers federal aid unless the United Auto Workers union agreed to cut wages next year to bring its members into line with their Japanese counterparts.
Republican Sen Bob Corker said the two sides had been very close to a deal, but that the UAW's rejection of wage concessions before 2011, when its current contract with the car makers expires, had kept them apart.
"We were about three words away from a deal," he said. "We solved everything substantively and about three words keep us from reaching a conclusion."
White House spokesman Tony Fratto said the government would evaluate its options in light of the collapse of the negotiations, but did not elaborate.
He said the failed legislation had "presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."
President-elect Barack Obama had also said he hoped the bill would be passed.
The deal would have given the "Big Three" - Chrysler, General Motors and Ford - access to emergency funding to help them cope with the sharp downturn in sales because of the global financial crisis.
General Motors and Chrysler say they risk ruin without immediate aid. Ford says it may need funds in the future. The three firms called for $34bn between them when their bosses recently went before Congress to put their case.
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