GM Tumbles to Lowest Since '30s, Ford Falls as Aid Plan Falters
By John Hughes and Jeff Green
Nov. 20 (Bloomberg) -- General Motors Corp. fell toward its lowest since the 1930s after U.S. lawmakers deadlocked on an auto-industry bailout, raising the prospect it could run out of cash before a new Congress can come to the rescue next year. Ford Motor Co. tumbled to a 28-year low.
Democratic congressional leaders disagreed with Republicans and President George W. Bush's administration over how to provide $25 billion in aid to GM, Ford and Chrysler LLC. Only two days remain in a lame-duck session to resurrect a compromise, though Senate Majority Leader Harry Reid said today Congress might return in December to finish its work.
``The desire is we complete all of our actions until we come back on Jan. 6, but that may not be possible,'' the Nevada Democrat said. ``It may be necessary that we come back after Thanksgiving.''
Reid earlier suggested the situation was dire and refused to set aside time today to debate a compromise proposed by Senator Kit Bond, a Missouri Republican. Reid said Bond's plan hasn't been put in writing and the House of Representatives is about to adjourn.
Bond and fellow Republican George Voinovich of Ohio insisted they weren't giving up on their proposal to speed up and broaden access to $25 billion already approved for fuel- efficient vehicle development that was a compromise.
A Democratic plan to help the automakers with funds from the recently approved $700 billion bank-rescue package stalled in the face of Republican opposition and a Bush veto threat. It may be revived next year after President-elect Barack Obama takes office in January and Democrats install a strengthened majority in both houses.
GM, the biggest U.S. automaker, said Nov. 7 it may run short of the $11 billion minimum cash it needs to pay its bills each month by the end of this year and will fall ``significantly'' short of that level by the middle of next year.
Cash Augmentation
The Detroit automaker burned through $6.9 billion in cash in the third quarter and had $16.2 billion on Sept. 30. Wagoner said yesterday he expects the automaker to slow its cash use to the $3.6 billion a quarter rate of the first half of this year.
``We're continuing to do everything we can to augment our cash position,'' Wagoner said in an interview yesterday after eight hours of testimony split between the U.S. House and Senate over two days.