Big Three Open to Ideas -- Including Merger

As the hearing concluded, Committee Chairman Chris Dodd, D-Conn., said Congress has no choice but to act. "This all falls in our lap up here in the waning hours of a Congress with hours to go," he said."If this [industry] were to collapse, it's a catastrophe. Maybe history will prove us wrong, but that's a hell of a bet to make with one of every 10 jobs in this country."

"Nothing concentrates the mind like a death sentence," added Dodd, who said he will meet with House and Senate leaders in the next few days to determine how to proceed.

Both GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli said they would be willing to accept a condition, suggested by Sen. Robert Bennett, R-Utah, that they merge in order to secure a bailout.

Wagoner said the companies had discussed a merger, but suspended talks because the financial markets collapsed, making it impossible to secure financing. Nardelli said a tie-up could provide cost savings of $8 billion to $10 billion annually.

In another potential condition, Corker proposed advancing money to GM if it would secure more labor concessions and agree to pay bondholders 30 cents on the dollar. Wagoner responded affirmatively, noting, "having a federal oversight board to force all the pieces to come together on a contingency for getting money is a valid one."

GM has about $62 billion in debt. It wants to lop off about $32 billion, according to the business plan it submitted to Congress. About $20 billion would result from rescheduled contributions to the Voluntary Employees Beneficiary Association, a UAW-run trust fund that will take over auto industry health-care obligations starting in 2010. Much of the rest comes from bondholders.