US auto bailout prospects revived in Senate

PROSPECTS for an auto industry bailout revived in the US Senate yesterday as surprise negotiations on a compromise moved forward and a vote was possible later in the day.

Senate Majority Leader Harry Reid said on the Senate floor that the deal, if struck, "would overwhelmingly pass" the chamber that just hours ago seemed resigned to sending the automakers back to Detroit empty-handed.

The scenario at the core of the possible compromise was proposed by Sen. Bob Corker, a Tennessee Republican, who would grant loans under stricter conditions than favored by Democrats and the White House.

"Good faith negotiations are going on as we speak," Reid said.

General Motors Corp and Chrysler LLC are seeking billions of dollars in immediate aid, while Ford Motor Co wants a hefty line of credit.

GM and Chrysler have warned they could collapse without billions in immediate federal intervention. Auto sales have plummeted amid a global economic slowdown.

The House of Representatives passed its version of the legislation on Wednesday. But the Republican minority in the Senate appeared to have more than enough votes to stop the White House-backed legislation with a procedural roadblock.

Shares of GM and Ford rose in extended trading following Reid's comments. Ford shares rose nearly 5 percent to US$3.04 from a US$2.90 close, while GM climbed nearly 2 percent to US$4.20 from US$4.12 at the end of regular trading.

Reid hoped for a vote on Thursday but also held out the possibility that negotiations could stall or fail.

"Everybody is trying to figure out how we can move forward. It's a long shot but I think we could still come out with something," a Senate Democratic aide said.

The House has adjourned for the year but could be called back, which would be necessary if the Senate approves the compromise plan. A House Democratic aide said the chamber could not vote on a modified Senate version until next week at the earliest.