Auto Bailout Will Be a Hard Bargain

(MoneyWatch)  Congress could pass a compromise auto-industry bailout this week, but it could be a costly victory for GM and Chrysler, if the automakers are forced to accept a "car czar" who could still force them into bankruptcy.

White House Press Secretary Dana Perino said in a Dec. 8 press briefing that Congress and President Bush were close to a deal, in which Congress would provide $15 billion in loans from funds that were originally allocated to help the U.S. auto industry produce more fuel-efficient vehicles.

In return, the White House says any automakers that get the money should have to accept government oversight, including what Perino called a "financial viability advisor," which most people refer to informally as a "car czar."

The car czar would have the power to force the companies to repay government loans immediately and/or push them into bankruptcy if it is determined that they are failing to move in the direction of "long-term viability," the press secretary said. Congress has yet to come up with a final version of the bailout proposal.

At this point, it looks as if the loans ?€" and the proposed car czar ?€" would apply only to GM and Chrysler. GM and Chrysler have both threatened to close if they don't get loans before Dec. 31.

On Dec. 8, Ford issued a statement opting out of any short-term bridge loan, although Ford reiterated it would be interested in access to a $9 billion line of credit, just in case it needs it.

"We do not face a near-term liquidity issue, and we will not be seeking a short term bridge loan. But Ford fully supports an effort to address the near-term liquidity issues of GM and Chrysler, as our industry is highly interdependent and a failure of one of our competitors could affect us all," the company said in a written statement.