Pelosi: letting US auto sector die 'not an option'

WASHINGTON, Nov 21 - Any congressional bailout of the distressed U.S. auto industry is not intended to be "life support," but doing nothing "is not an option," House Speaker Nancy Pelosi said on Friday.

"We don't have any intention of seeing the auto industry go down," Pelosi pledged one day after Congress pulled the plug on Detroit's plea for $25 billion in immediate aid to help avert what industry executives warned could be a Big Three collapse.

Pelosi said she and Senate Majority Leader Harry Reid plan to outline their expectations for the next round of aid proposals in a letter to the chief executives of General Motors Corp, Ford Motor Co and Chrysler LLC.

Democratic leaders demand the companies demonstrate financial viability and accountability, but appear to be giving Detroit wide latitude on explaining how they would use bailout money to reverse their disastrous financial slide.

"It's another opportunity for them to say to the American people 'give us your money because we'll put it to good use,'" Pelosi said.

"This isn't to be life support for three months, it's about viability for a long time to come," she said.

One option Pelosi does not favor is bankruptcy, saying that would be "digging the hole far too deep."

Some members of Congress have expressed an interest in at least exploring the possibility of GM, Ford and Chrysler opting for a pre-packaged court restructuring.

Under that scenario, terms for cutting costs are negotiated with labor, suppliers and lenders ahead of time. GM and Chrysler said this week they had looked at bankruptcy alternatives and rejected them as too risky.

Reid and Pelosi are keeping options open to reconvene Congress in December to consider the auto bailout if they are satisfied with Detroit's new proposals for aid.

If it is determined more time is needed, Congress could take up the matter in January.