Auto Bailout Deal Advances as Democrats Offer Draft Bill ~ Doug Mills ~ The New York Times

Auto workers and retirees who organized a caravan from several Midwest states walked to a news conference on Capitol Hill on Monday.

By DAVID M. HERSZENHORN Published: December 8, 2008

WASHINGTON - An agreement between the White House and Congressional Democrats over the shape of a rescue plan for the auto industry advanced on Monday, with Congressional Democrats calling for a taxpayer-financed plan that would be directed by one or more appointees of President Bush.

According to draft language being circulated on Capitol Hill, the Democrats would call for an overseer, also known as a "car czar," with expertise in such areas as "economic stabilization, financial aid to commerce and industry, financial restructuring, energy efficiency and environmental protection."

The United Auto Workers union, meanwhile, is planning to seek a stake in General Motors and a seat on its board in exchange for concessions by its members.

The draft bill, which is still being negotiated by Congressional leaders and the Bush administration, would provide emergency bridge loans totaling about $15 billion to the foundering automakers, particularly General Motors and Chrysler, which are in the greatest danger of financial collapse.

The president’s appointee would be responsible for disbursing the emergency money and would be responsible for supervising the implementation of the drastic reorganization plans that the auto manufacturers agreed to carry out in exchange for government aid. The president would also be able to designate other officers from within the executive branch to assist in the auto industry rescue.

By Jan. 1, according to the Democrats’ draft, the car czar would be required to develop benchmarks for assessing the automakers’ progress in carrying out those plans. The car czar would also have the powers to convene meetings of stakeholders in the auto companies including labor unions, creditors, suppliers, automobile dealers and shareholders.

The automakers would have to submit to broad oversight and also grant unfettered access to their financial books, company records and other data, and they must seek permission from the car czar for any business transaction worth $25 million or more.

In proposing a single presidential-designee as the supervisor of the auto bailout plan, Congressional Democrats decided not to pursue the creation of an oversight board that would have included five cabinet secretaries and the head of the Environmental Protection Agency.

The Democrats’ draft legislation includes an array of stringent taxpayer protections. But in perhaps the most symbolic gesture the proposed bill would ban the automakers from owning or leasing any private aircraft - a stinging rebuke to the chief executives of the Big Three automakers who flew to Washington in their corporate jets in November to make their first, failed pitch for taxpayer assistance.

The proposed bill also bars the companies from paying stockholder dividends while the emergency loans are outstanding, prohibits senior executives from receiving bonuses or so-called "golden parachute" severance packages, and gives the government stock warrants in the companies so that taxpayers can benefit if the firms profit and the value of their shares increase in the future.

President Bush’s chief spokeswoman agreed Monday that the two sides were getting close to an agreement.

"I think it’s very likely," the spokeswoman, Dana Perino, said when she was asked whether an agreement might be reached before the end of the day. "We’ve made a lot of progress on Friday."

Representative Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee, offered a similar prediction.

Congressional Democrats have been drafting legislation for tight government control of the crippled industry. While the form of oversight was still under discussion, including the powers of a potential "car czar" to oversee the rescue package, the talks between the White House and Congress made clear the extent to which the auto companies would have to submit to substantial government supervision in order to receive a taxpayer-financed bailout.

Once a bill offering aid to the industry is completed by Congressional Democrats and the White House, it would still need the approval of some Senate Republicans. Senator Carl Levin, Democrat of Michigan, one of the auto industry’s biggest supporters, said on Sunday that it was uncertain whether the plan would win the 60 votes needed to advance in the Senate.

President-elect Barack Obama, whose transition team has been involved in the talks, made clear in an interview and at a brief news conference on Sunday that any aid to the Big Three auto companies should not come without significant concessions.

Still, the bill seemed likely to stop short of authorizing the broad powers that some lawmakers had urged to allow what could have amounted to an out-of-court bankruptcy proceeding, in which the automakers’ creditors could be forced to accept reduced payments, labor contracts could be rewritten and executives could be summarily dismissed.

The U.A.W. has been anticipating that it would have make concessions. These are expected to include allowing G.M., Ford and Chrysler to postpone contributions to a trust fund, scheduled to assume some $85 billion in liabilities for retiree health care, and eliminating a job bank for idled workers.