(Updates throughout with further detail) By Corey Boles and Josh Mitchell Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- Emerging from a nearly six-hour hearing of the Senate Banking Committee with the heads of the big three U.S. auto makers, Sen. Christopher Dodd, D-Conn., the panel's chairman, said he believed there was growing consensus among lawmakers that something needed to be done to help the companies.
But he said equally as clear is that Congress isn't going to write a blank check to General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLC without a laundry list of conditions attached to the loans.
"There is consensus that bankruptcy is the wrong approach on this," Dodd said, speaking to reporters after the hearing. "There's also consensus that writing a check for $34 billion without any conditionality is not the answer."
He said much more work needed to be done, but he felt that he had a situation among lawmakers where a deal could be struck on the way forward to craft a rescue package for the industry.
Thursday the amount the three companies were asking for had jumped from $25 billion to $34 billion.
During their testimony, GM's Rick Wagoner, Ford's Alan Mulally and Chrysler's Robert Nardelli agreed that a series of tough conditions could be attached to a federal loan.
In the case of Wagoner and Nardelli, this included the possibility that Congress could mandate that their companies merge in order to receive federal assistance.
Both men said they would be open to such a suggestion, even if it cost them their jobs.
Earlier this year, talks between the two car makers fell apart in the face of the urgent cash crunch they are both facing.
Sen. Bob Corker, R-Tenn., said that he strongly hoped the two would consider a deal.
"I hope that's attractive because our country can't really deal with three separate auto manufacturers," said Corker.
All three executives accepted the notion of the creation of an oversight board, or individual, who would have the authority to dictate terms of the companies' restructuring if all interested parties couldn't come to an accord.
These parties include the car makers, labor unions, part suppliers, dealers and investors.
The three executives seemed much more contrite than they did two weeks ago when they were initially in town asking for emergency funding from Congress.
This included driving from Detroit to Washington D.C. in hybrid vehicles, rather than flying in their corporate jets as they did last time. All three said the intended to make the return trip by car as well.
Dodd lambasted officials at the Treasury and the Federal Reserve for refusing to act directly to provide temporary financial assistance to the three companies, but said he wouldn't give up on the idea of pressuring them to do so.
He had invited officials from the Treasury and Fed to testify before the panel, but noted sourly they had declined to do so.
The Bush administration's reluctance to tap the TARP funds was significantly undermined at Thursday's hearing by the interim head of the General Accountability Office, an investigative arm of Congress.
"We believe that legislation is worded broadly enough that would permit the secretary of Treasury to provide the assistance using TARP funds," Gene Dodaro, the interim comptroller general, said, referring to the Troubled Asset Relief Program.
He also said the Fed had the authority to provide financial assistance along the lines as that it gave to American International Group Inc. (AIG).
Earlier Thursday, a Fed official said it did not intend to provide assistance to the auto sector.
Despite Dodd's belief that a consensus is emerging about the need at least to act, if not about what a final rescue package will look like, there remains considerable uncertainty that an agreement can be reached that lawmakers and the Bush administration can agree to.
Sen. Carl Levin, D-Mich., said after the hearing that the auto makers' best hope for a bailout remained with the Treasury Department's $700 billion financial rescue program.
Levin said he felt confident that arguments made during Thursday's hearing would persuade the administration to change its stance.
"It's always been the cleanest, clearest, most direct way to do this, and it still remains that way," Levin said during a conference call with reporters.
U.S. President George W. Bush expressed his own doubts about a rescue of the companies.
"No matter how important the autos are to our economy, we don't want to put good money after bad," Bush told NBC News in an interview. "In other words, we want to make sure that the plan they develop is one that ensures their long-term viability for the sake of the taxpayer."
One leading economist stated that if financial assistance wasn't extended to the companies, it would likely result in their sliding into bankruptcy.
Dr. Mark Zandi, chief economist at Moody's Economy.com, told the panel of senators that Congress shouldn't hesitate to act to save the auto companies. But, he said, given the most likely outcome for the auto sector and the wider U.S. economy, it would cost far more than the $34 billion the companies are requesting.
The ultimate price tag would more likely be between $75 billion and $125 billion, Zandi said.
He recommended money be provided to the companies in two tranches. The first "should be sufficient to forestall the automakers' imminent disorderly bankruptcy," and the second should only be provided if the restructuring plans are proceeding successfully.
Wagoner and Nardelli suggested that after receiving an initial tranche of money to ensure they could survive the next few months, they could come back to Congress at the end of March 2009 to report on the progress of their restructuring.
They both agreed with Corker's suggestion that if, by that time, they hadn't reached agreement with all parties, they would pay the money lent to them back in full and agree to file for bankruptcy.
Mulally noted that Ford isn't looking for an immediate handout, but the creation of a longer term loan facility.
Friday will see a second round of hearings for the three executives, this time before the House Financial Services Committee.
It is expected that shortly thereafter, Democratic leaders in the House and Senate will make a decision about whether to bring lawmakers back to Congress next week to vote on a rescue package.
-By Corey Boles and Josh Mitchell, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=G8rN%2BJs%2FXaaSgxy4%2FPCYtg%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
December 04, 2008 17:53 ET (22:53 GMT)

Publié le 04 Décembre 2008 Copyright © 2008 Dowjones