By John Crawley and John Poirier, Reuters
All options were on the table on Wednesday as congressional committees scrutinized automakers' restructuring plans ahead of make-or-break hearings starting today on the Detroit 3's urgent appeal for $34 billion in taxpayer-guaranteed loans.
Lawmakers, especially in the Senate, appear to have little patience for political wrangling over whether to extend taxpayer funds to an industry with what they see as a questionable future.
"What is the strategy moving forward?" Sen. Robert Menendez, D-N.J., asked in an appearance on CNBC. Menendez is on the Senate Banking Committee, which today will be the first of two panels to question the CEOs of General Motors (GM), Ford Motor (F) and Chrysler.
Menendez said all options remain on the table — including government-financed "prepackaged bankruptcies" — as automakers briefed staffs of the banking panel and House Financial Services Committee, which will question the CEOs on Friday.
"I continue to look at that as a potential option," Menendez said. Democratic leaders, the companies and the UAW have sought to dampen any talk of Congress possibly facilitating a bankruptcy court restructuring.
House Speaker Nancy Pelosi said on Tuesday that bankruptcy was out of the question.
Pelosi guessed the Detroit 3 likely will get some form of loan package or other aid from Congress or the Bush administration due to the potential for broad economic consequences if they fail.
But Menendez and other lawmakers have said Alan Mulally of Ford, Rick Wagoner of GM and Bob Nardelli of Chrysler must make a convincing case about their distress and prospects for recovery. The issue of supporting one or more prepackaged bankruptcies — a process in which restructuring terms are settled ahead of any court filing, is expected to come up at hearings.
Sen. Arlen Specter of Pennsylvania, one Republican who's been open to compromise on aid, has said the mood "candidly isn't supportive" of a bailout and "there's a skepticism about their ability to formulate plans to survive."
Senate Majority Leader Harry Reid said a Democratic plan to tap the Wall Street rescue fund to save U.S. automakers does not have the votes to pass.
The Senate plans to take up bailout legislation on Monday. House Democratic leader Steny Hoyer of Maryland also hopes his chamber will act next week. In Chicago, President-elect Barack Obama said that the automakers have put forward a "more serious" restructuring proposal to Congress, but withheld judgment until after the hearings.