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Key lawmaker calls for head of GM to step down

The ailing U.S. auto industry needs changes at the top, an influential Democratic senator said on Monday as Congress and the White House worked to complete a rescue plan.
Big Three Automakers testify before House Committee on Financial Services
Chairman and CEO of General Motors Richard Wagoner, left, President and CEO of Chrysler Robert Nardelli, middle, and Alan Mulally, the CEO of Ford Motor Company, testify before the House Committee on Financial Services Friday.Matthew Cavanaugh / EPA file
/ Source: Reuters

The ailing U.S. auto industry needs changes at the top, an influential Democratic senator said on Monday as Congress and the White House worked to complete a plan to save Detroit’s ‘Big Three’ U.S. automakers and stem the deepening U.S. recession.

Even if they manage to reach an agreement in principle to provide General Motors Corp, Chrysler LLC and Ford Motor Co with at least $15 billion in short-term loans, it was uncertain if it would become law.

Democrats have a majority in the 100-member Senate, which is to meet on Monday and could begin consideration of legislation within days. But skeptical Republicans could kill such a measure with a procedural hurdle that would need 60 votes to clear.

Democratic Sen. Christopher Dodd, the powerful chairman of the Senate Banking Committee, indicated that any bailout might come with strings attached for auto industry executives, who appeared before his committee last week to plead for help.

“It is not my job to hire and fire, but what I’m trying to suggest is that you need to have new teams in place,” Dodd told ABC’s Good Morning America show on Monday.

“If you are going to restructure a company you can’t be asking the people frankly, many who were involved in creating the problems we’re in, to be involved in restructuring.”

That echoed comments by President-elect Barack Obama on Sunday, who said the heads of the automakers should go if they proved unwilling to make the tough choices needed to retool their operations to produce more fuel-efficient vehicles.

Negotiators are trying forge a bill to provide with at least $15 billion in short-term loans, although analysts say the auto industry may eventually need closer to $125 billion to survive. The three firms had sought $34 billion from Congress.

A White House spokeswoman said Monday it is “very likely” that the Bush administration could reach a deal with Congress on Monday to get emergency aid to failing U.S. automakers, but expressed concern that the White House has not seen a specific proposal from Democrats.

Democratic Sen. Carl Levin of Michigan, where the U.S. auto industry is centered, said he was confident there would be a deal by Monday, but uncertain if there would be the votes.

Democratic negotiators modified their draft proposal on Sunday, a congressional aide said, and planned to get it to the White House for consideration.

In addition to reorganizing automakers and protecting taxpayer investment, possible conditions include creating a government “car czar” to oversee the bailout and additional concessions by the United Auto Workers union as well as the corporate leadership.

The New York Times reported on Sunday that Democrats were considering having the “car czar” lead an oversight board made up of five cabinet secretaries and the head of the Environmental Protection Agency.

If the deal passes the Senate, it would go to the House of Representatives, where it is expected to have smooth passage.

The measure would then be sent to President George W. Bush as one of the last ones he signs into law before Democrat Barack Obama succeeds him as president on January 20.

“I have said repeatedly that to allow the auto industry to collapse precisely at a time when we are seeing record joblessness in unacceptable,” Obama said in Chicago on Sunday.

The head of United Auto Workers, Ron Gettelfinger, said if Congress did not come to the aid of the auto industry “you would see a collapse of GM and shortly thereafter Chrysler and then the impact on Ford”.

“It would have a monumental impact on our economy as a whole,” he told NBC’s Today show on Monday.

Critics of the rescue plan, however, have said any loans would be a waste of money unless automakers were able to cut costs and better compete with more fuel-efficient, foreign-made cars.

After months of stalled efforts to help the companies, the Bush administration and congressional Democrats made a breakthrough on Friday on how to pay for the bailout, agreeing the money will come from a loan program approved in September to help automakers make more fuel-efficient vehicles.

On the same day, the government reported that employers slashed more than 533,000 jobs in November, the highest monthly decline in 34 years. Lawmakers fear hundreds of thousands more would lose their jobs if any of the major automakers failed.