WASHINGTON (Reuters) - Senate Majority leader Harry Reid wants to try to find a way to avert threatened bankruptcies in the U.S. auto industry with Detroit Three chief executives readying for a make-or-break hearing on Thursday on a $34 billion bailout request.
With House Speaker Nancy Pelosi saying a day earlier that auto bankruptcies were not an option and some government aid for industry was likely, Democratic leaders in both houses positioned themselves to at least support the urgent cash needs of gasping General Motors and Chrysler, which amount to less than a third of the rescue proposal.
There appears initially to be little appetite in Congress to provide a $34 billion package during a short session planned for next week, especially among Republicans, according to a snapshot of sentiment provided by lawmakers, aides and lobbyists on a day when neither house was in session.
Despite pledges from Reid and Pelosi to help, House and Senate aides said there was no clear legislative path yet to how a major aid package -- which would likely include requirements for broad restructuring -- could be arranged so quickly.
The White House did not dismiss the industry's $34 billion figure on Wednesday but said it was too early to say what it might support on an emergency basis.
Both Congress and the administration insist that any assistance be conditioned on the industry's commercial viability, which the companies outlined in plans submitted to Congress on Tuesday along with their funding proposals.
Some Republicans flatly oppose a bailout but aides said most lawmakers agree automakers need help and that a collapse of one or more of them would devastate an economy already a year into recession.
Industry says 1-in-10 U.S. jobs are directly or related to the auto manufacturers.
General Motors Corp and Chrysler LLC told Congress on Tuesday they face possible failure if they do not receive government loans. GM wants $4 billion and Chrysler $7 billion by year's end. GM also wants another $8 billion in early 2009 and a $6 billion line of credit if its cash position deteriorates further.
A spokesman for Reid said the Nevada Democrat was "committed" to finding a way to helping avert any bankruptcies, but aides to other lawmakers and industry insiders say the degree to which Congress may be willing to help will be clearer after upcoming Senate and House hearings.
How chief executives Rick Wagoner of GM, Alan Mulally of Ford and Bob Nardelli of Chrysler respond to lawmaker questions and proposals in the Senate Banking Committee on Thursday and the House Financial Services Committee on Friday could determine the fate of the aid proposal.
"All options are on the table," Banking Committee member Robert Menendez, a New Jersey Democrat, told CNBC television.
Congressional leaders said the executives' unconvincing testimony two weeks ago coupled with partisan political wrangling over the issue torpedoed Detroit's initial attempt to win $25 billion in bailout funds. They were given a second chance by Reid and Pelosi.
Most of the pressure will be on Wagoner and Nardelli as Ford Motor Co says it has sufficient funds for the moment and has limited its request to a $9 billion line of credit. The money would be tapped only if recession worsens and pushes already depressed auto sales to severe new lows.
One issue expected to come up on Thursday is the option of pre-packaged bankruptcies. Under that scenario, rejected by the companies, agreements to cut labor and other costs and renegotiate supplier and lender terms are arranged ahead of a Chapter 11 filing. Restructuring would be faster than normal.
Democratic leaders, the companies and the United Auto Workers have sought to dampen any discussion of Congress possibly facilitating a bankruptcy. They say Chapter 11 would kill the industry.
UAW President Ron Gettelfinger said on Wednesday the union would surrender job security protections and delay payments to a retiree healthcare trust to help clinch government help. He said the UAW would consider other changes to contracts.
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