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US car bail-out fails in Senate US car bail-out fails in Senate
(about 1 hour later)
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. A $14bn (£9.4bn) bail-out deal for the US car industry has failed to get Senate support, raising fears of job cuts and a possible industry collapse.
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. Bipartisan talks on the rescue plan collapsed over Republican demands that the United Auto Workers (UAW) union agree to swift wage cuts.
The White House said the bill had been the Big Three car makers' "best chance to avoid a disorderly bankruptcy". The White House said the plan was American carmakers' "best chance to avoid a disorderly bankruptcy".
The House of Representatives passed the White House-backed bill on Wednesday. Shares fell sharply around the world on the news.
The Democrats needed some Republicans to back the bill in the Senate as they have a majority of just one, and some in their own party were expected to vote against. Japan's Nikkei share index fell 484.68 points, or 5.6%, to 8253.87, with carmakers among the hardest hit. Shares in Toyota, Honda and Nissan all fell by at least 10%.
'Three words away' German, French and UK stocks all opened lower on the news, with the FTSE-100 index of leading shares down 147.4 points at 4,241 in early trade.
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. Tense and emotional
The Republicans left the closed-door meetings after the UAW union refused to cut wages next year to bring them into line with their Japanese counterparts. UAW's current contract with the car makers expires in 2011.
I dread looking at Wall Street tomorrow - it's not going to be a pleasant sight Senate Majority Leader Harry ReidI 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, our correspondent says, as the Democrats made last minute pleas to get their Republican counterparts to vote in favour of helping America's biggest car makers - General Motors, Chrysler and Ford. "We were about three words away from a deal," said Republican Sen Bob Corker . "We solved everything substantively and about three words keep us from reaching a conclusion."
Alan Reuther, the UAW's legislative director, declined to comment to reporters as he left a meeting room during the negotiations, according to the Associated Press.
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.
With a majority of just one in the Senate, the Democrats needed some Republicans to back the bill as some in their own party was expected to vote against the bill.
The atmosphere in the Senate was tense and at times emotional, our correspondent says, as the Democrats made last-minute pleas to get their Republican counterparts to vote in favour of helping America's biggest car makers, Ford, Chrysler and General Motors.
Millions affected
The three companies employ 250,000 people directly and the failure of the bail-out raises the prospect of huge job losses.
The Senate majority leader, Harry Reid, said he was "terribly disappointed" when it became clear the vote had collapsed, calling it a "a loss for the country".The Senate majority leader, Harry Reid, said he was "terribly disappointed" when it became 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."
Shares slide
The news brought a sharp fall in share prices in Japan, Taiwan, South Korea and Australia.
Sen Reid said there had been too many differences between the Democratic and Republican representatives.
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
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. "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."
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."
Alan Reuther, the UAW's legislative director, declined to comment to reporters as he left a meeting room during the negotiations, according to the Associated Press.
Our correspondent says it is clear now that there will be no Congressional action on a bail-out this year.
White House spokesman Tony Fratto said the government would evaluate its options in light of the collapse of the negotiations, but did not elaborate.White House spokesman Tony Fratto said the government would evaluate its options in light of the collapse of the negotiations, but did not elaborate.
"We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and 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," he said."We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and 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," he said.
President-elect Barack Obama had said he supported the bill. President-elect Barack Obama had also supported the bill.
The deal would have given the Big Three access to emergency funding to help them cope with the sharp downturn in sales because of the global financial crisis. Help needed
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. The deal would have given the Big Three carmakers access to emergency funding to help them cope with the sharp downturn in sales because of the global financial crisis.
The Big Three have all seen sales fall sharply this year in the US. General Motors and Chrysler have said they risk ruin without immediate aid. Ford says it may need funds in the future.
While this decline reflects an industry-wide fall that has also hit European and Japanese carmakers in the US, they have also been criticised for not offering an attractive range of vehicles. The bosses of the three firms had previously asked for $34bn from Congress.
They have all seen sales fall sharply this year in the US, partly reflecting an industry-wide fall, and partly because their large gas-guzzling vehicles are no longer what customers want.
Do you work in the US car industry? What do you think of the planned bail-out? Send us your comments and experiences using the form below.Do you work in the US car industry? What do you think of the planned bail-out? Send us your comments and experiences using the form below.
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