U.S. lawmaker warns of carmaker job loss "disaster"

By Kevin Drawbaugh and John Crawley

WASHINGTON (Reuters) - A senior U.S. congressional leader warned on Friday of an "unmitigated disaster" if a major U.S. automaker were allowed to collapse at a time when the economy is already losing jobs at an alarming pace.

With new data showing employers axed more than 533,000 jobs in November -- the highest monthly job-loss in 34 years -- Rep. Barney Frank urged the Bush administration to use money from a $700 billion (479.4 billion pound) bank bailout programme to assist Detroit.

The financial system and the economy would be devastated if General Motors, Ford or Chrysler were forced into bankruptcy or shutdown, said the Massachusetts Democrat who chairs the House Financial Services Committee.

"In the midst of the worst economic situation since the Great Depression it would be an unmitigated disaster," Frank said as the CEOs of the Big Three U.S. automakers testified to lawmakers for a second straight day.

Despite the grim economic outlook, the auto industry's drive for a $34 billion emergency taxpayer bailout was stuck in neutral with lawmakers trapped in a political gridlock.

Broad consensus exists between Congress and the Bush administration that the automakers need help, but officials are refusing to budge from their views on how to do it, with some lawmakers opposed to doing anything at all.

The White House refuses to carve out for Detroit some of the $700 billion bailout it is already showering on Wall Street and the banks, saying that money is intended only to help stabilise the financial sector. It backs helping the automakers by modifying a $25-billion Energy Department loan program meant to promote fuel-efficient technologies.

President George W. Bush told reporters on Friday it was important for Congress to act next week on redirecting those energy loans.