Negotiations to bring measure up for vote fall short, possibly dooming GM, Chrysler to bankruptcy.
By Chris Isidore, CNNMoney.com senior writer
Hopes for Congressional approval of a bailout of the U.S. auto industry appeared to fall apart late Thursday night as Senate leaders said Democrats and Republicans were unable to reach a deal that could get the bipartisan support needed to bring the measure for the vote.
The Senate voted 52-35 to bring the measure for a vote, but that was short of the 60 votes needed to advance the legislation. The failure followed the collapse of negotiations between Senate Democrats and Republicans seeking a compromise that all sides could accept.
This development could possibly doom General Motors (GM, Fortune 500) to a bankruptcy and closure in the coming weeks, with Chrysler LLC potentially following close behind.
While Ford Motor (F, Fortune 500) has more cash on hand to avoid an immediate crisis, its production could be disrupted by problems in the supplier base, as could the production of overseas automakers with U.S. plants such as Toyota Motor (TM) and Honda Motor (HMC).
The bill would have provided $14 billion in federal loans as a stopgap measure until the new Congress and the incoming Obama administration could reach a longer-term solution.
However, the Big Three could still wind up getting government funding. Bush officials warned wavering GOP senators earlier Thursday that if they didn’t support the legislation, the White House will likely be forced to tap funds from the Wall Street bailout to lend them money, two Republican congressional officials told CNN.
The White House has been strongly opposed to using any of the $700 billion in bank bailout funds to help the auto industry, but the Bush administration has also expressed that the Big Three must get some financial assistance soon.
White House Press Secretary Dana Perino said earlier Thursday that the economy is too weak right now to weather bankruptcies by one or more automakers.
Hopes for compromise quickly faded
Earlier in the evening, it appeared that the two sides were getting close to an agreement on the bailout. But just after 10 p.m., Senate Majority Leader Harry Reid, D-Nev., announced a failure to reach an agreement and that he would call for a procedural vote to test support for the measure.
“We have worked and worked and we can spend all night tonight, tomorrow, Saturday, and Sunday, and we’re not going to get to the finish line,” Reid said on the Senate floor before the vote. “That’s just the way it is. There’s too much difference between the two sides.”
Senate Minority Leader Mitch McConnell, R-Ky., said the sticking point was the United Auto Workers union’s refusal to put employees at U.S. auto manufacturers at “parity pay” with U.S. employees at nonunion plants operated by foreign automakers in the United States. more