Deadline For Big Three's Restructuring Proposal For Congress Tuesday

December 2, 2008 9:20 a.m. EST

Washington, D.C. (AHN) - The nation's three largest automakers - Chrysler, Ford and General Motors - are set to submit to Congress on Tuesday a "credible restructuring plan that results in a viable industry." The deadline comes ahead of a special session next week in which lawmakers are expected to vote on a $25 billion loan package for the ailing auto industry.

House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) had sent a letter to top executives of the Big Three on Nov. 21 asking them to submit a proposal on why the government should give them a loan. The automakers have to submit the plan to both House Financial Services Committee chair Barney Frank (D-MA) and Senate Banking Committee chair Christopher Dodd (D-CT).

The plan must "provide a forthright, documented assessment of the auto companies' current operating cash position, short-term liquidity needs to continue operations as a going-concern, and how they will meet the financing needs associated with the plan to ensure the companies' long-term viability as they retool for the future," Pelosi and Reid said in their letter.

Last week, Energy Secretary Samuel Bodman and Commerce Secretary Carlos Gutierrez sent a letter to both Frank and Dodd saying that the plan "should address the factors that drive overall competitiveness."

In a press briefing on Wednesday, Deputy White House press secretary Tony Fratto said the "firms need to be able to pay back the government for the funds that they accept, and that they need to be able to show a net -- a positive net present value, that they are a firm that's worth something greater than zero. These are the kinds of things that we think Congress should consider if they're going to go forward and think about ways to use taxpayer dollars."

Democrats have been working on a bill to salvage the ailing auto industry using some of the $700 billion financial bailout, called Troubled Assets Relief Program (TARP), that Congress approved in early October. Sen. Carl Levin (D-MI), whose state is where the Big Three are headquartered and who co-chairs the Senate Auto Caucus, is working on legislation that will divert $25 billion from the TARP to automakers. Frank is drafting a similar bill.

Republicans have expressed little support for the plan. Many have said the emergency aid should come from the $25 billion loan program at the Energy Department, while Sen. Richard Shelby (R-AL), the ranking Republican in the Senate Banking Committee, has said on NBC's "Meet the Press" bailing out the industry would only postpone "the inevitable."

House Minority Leader John Boehner (R-OH) has said in a statement, "Why have the Democratic leaders of Congress been willing to provide this money without insisting that the companies receiving these federal dollars demonstrate to Congress and to taxpayers that they have a credible plan to strengthen their financial health?"

Chrysler chairman and chief executive officer Robert Nardelli, Ford president and CEO Alan Mulally, and General Motors chairman and CEO Richard Wagoner all testified before Frank and Dodd's committees last week to ask for aid. But they were later reported as having taken private jets to Washington, which lawmakers and the public viewed as wasteful.

Frank is set to hold a committee hearing this Friday on the bailout. Congress is set to consider the bailout legislation when it holds session on the week of Dec. 8. It will be the last time the 110th Congress meets before the new administration is inaugurated.

President-elect Barack Obama has said he agrees with Pelosi and Reid's demand for a "credible" plan from automakers, saying he was surprised that the auto executives did not have a "well thought-out" proposal.