Updated from 4:13 p.m. EST
The CEOs of the Detroit automakers generally agreed Thursday to every condition a variety of lawmakers suggested -- including a potential merger of
-- if they can secure a $34 billion bailout.
But it remains unclear whether Congress can reach a bailout plan, despite detailed discussions of potential conditions and mechanisms to oversee a rescue package and even with the precarious state of GM, which says it needs $4 billion by the end of the month.
Make no mistake: The future of iconic GM, which still produces one of every five cars sold in the U.S., even though its market share has declined for years, is at the epicenter of this national discussion, and is the sole reason Congress is considering whether to meet in special session next week.
"There's no way we would be having these meetings if it were not for General Motors," said Sen. Bob Corker, R-Tenn., at one point during the nearly six-hour hearing of the Senate Banking Committee
Chrysler is privately held, while
has said it does not currently face a liquidation threat. GM is seeking a $12 billion bridge loan and a $6 billion line of credit, Chrysler wants a $7 billion loan, and Ford is asking for access to a $9 billion line of credit that it would use only if future conditions warrant.
"I don't believe GM will make it out of the end of the year, unless something changes dramatically," warned Ron Gettelfinger, president of the United Auto Workers union. "Honestly, we're down to the wire. I believe we could lose GM by the end of the month."
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.
Corker, who advocates Chapter 11 bankruptcies as the most efficient method for automakers to restructure, questioned why Chrysler is seeking a bailout when private equity investor Cerberus, which owns 80% of the company, "has cash they are unwilling to put into this company."
This is like a flier for you guys," he told Nardelli. "This is life again. I have a little trouble with that."
The 1979 Chrysler bailout, which involved an oversight board that awarded funds only if Chrysler stakeholders made concurrent concessions, appears to offer a model. But Sen. Charles Schumer, D-N.Y., said it may be more efficient to have a single person oversee a program this time around.
True to form, the Detroit CEOs acceded to the senator's suggestion. "It would be very helpful to have someone to work with on this, a board or an individual," said Wagoner. "If that person were to have the strong power to execute, that would be OK with us."