Auto bailout struggles to gain ground in U.S. Senate

By John Crawley

WASHINGTON (Reuters) - A proposed $25 billion (16 billion pounds) bailout of U.S. automakers failed to gain traction on Tuesday in the Senate despite pleas from industry that failure to act could result in wholesale liquidation.

There is strong sentiment to help General Motors Corp, Ford Motor Co, and Chrysler LLC, with loans, but doubts surfaced about the amount requested, whether Detroit companies would be healthy enough to repay it, and a general resistance to spending yet more taxpayer money on corporate rescues.

"We're not there yet," Christopher Dodd of Connecticut, the Banking Committee chairman said after a four-hour hearing on the auto bailout. "Trying to jam something through would be a mistake."

Dodd and his colleagues grilled Rick Wagoner of GM, Alan Mulally of Ford and Robert Nardelli of Chrysler, who said he would work for $1 if it would help sway reluctant lawmakers to sign off on a bailout.

Nardelli said Chrysler explored bankruptcy and other options before appealing to Washington. He said Chrysler was fragile, while Wagoner warned of a "catastrophic" shock to the U.S. economy if insolvency struck the industry.

Ron Gettelfinger, United Auto Workers president, said inaction by Congress could result in GM, Ford and Chrysler liquidating. The three companies employ nearly 250,000 people and affect millions of other workers in related industries.

The executives did not balk at proposed bailout conditions, including Wagoner, who said GM would agree to the government taking an equity stake. GM said it needs between $10 billion and $12 billion in bailout cash, while Chrysler and Ford said about $7 billion each would help them.

But executive assurances of loan repayment, transparency, exclusively investing bailout funds in the United States, and promising to pursue fuel efficiency, did not appear to move their allies in the Senate any closer to success.