Rep. Barney Frank, House Financial Services chairman, predicted Monday that a deal for a short-term bailout of the auto industry could be struck by the end of the day, with one last funding issue still to be resolved.
White House and top congressional leaders negotiated throughout the weekend on a rescue package for Detroit’s Big Three auto companies — General Motors, Ford and Chrysler. The companies have asked for $34 billion in federal loans and credit lines, with GM and Chrysler saying they may go under if the government refuses to help.
Mr. Frank, Massachusetts Democrat, said the grim economic news on jobs on Friday helped spur a deal, which would give the companies about $15 billion through March. The funds will come from a previously approved Department of Energy program originally designed to promote car fuel efficiency.
“I do believe that there will be an agreement announced by the end of today,” Mr. Frank said in an interview on CNBC. “Before the week is out, we will have sent to the president’s desk, and he would have signed, a short-term loan beginning the process of significant restructuring, insisting on concessions from all parties and increasing, we hope, energy efficiency.”
The Senate reconvened for a second lame-duck session Monday to begin consideration of an auto rescue plan, and lawmakers hope to have the final bill to President Bush by the end of the week.
It was widely anticipated that the incoming Obama administration will need to offer an even larger longer-term federal bailout to the struggling carmakers when it takes office in late January. The taxpayer rescue comes with numerous strings, including the ouster of top executives and the appointment of a federal “car czar” to monitor the U.S. industry’s restructuring progress.
Mr. Frank said the emerging short-term bill would have provisions for repayment of any federal loans and “requirements that [the auto companies] begin soon to do the restructuring that people think is necessary.”
Democrats have urged the Bush administration to tap the $700 billion banking bailout fund approved in early October to help Detroit, a step that Treasury Secretary Henry M. Paulson Jr. has resisted.
On another issue, Mr. Frank told a housing finance conference sponsored by the Treasury Department on Monday that there was growing frustration in Congress that the nearly $350 billion in the banking bailout funds committed by the Bush administration has yet to ease funding woes for homeowners facing foreclosure on their mortgages.
The outgoing Congress rejected an overhaul of the nation’s bankruptcy laws to afford borrowers more rights, but Mr. Frank predicted support for bankruptcy law changes will grow in the new Congress if the foreclosure squeeze continues.
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