Congress reaches agreement on $15b to $17b Detroit 3 bailout

Democratic leaders of Congress revealed late on Friday that they had reached an agreement on a bailout plan for the Detroit 3 ranging in the vicinity of $15 billion to $17 billion, about half what the carmakers were seeking. The plan still needs to be voted on but this is expected to take place next week.

The accord is designed to provide short-term loans to General Motors, Ford and Chrysler to prevent an industry collapse and allow a comprehensive restructuring of the companies early next year, House Speaker Nancy Pelosi said in a statement.

Pelosi also revealed that she was willing to fund the bailout with part of the $25 billion package already approved by the Bush administration to help accelerate development of more fuel-efficient vehicles. Pelosi, along with Senate Majority Leader Harry Reid, had previously opposed such a plan, reports Automotive News.

Under the latest agreement, Pelosi said she would demand "a guarantee that those funds would be replenished in a matter of weeks" and that the carmakers promise not to delay work on improving fleet wide fuel economy levels.

The loans would allow the Detroit 3 to maintain operations until President-elect Barack Obama takes office on January 20.

Ford CEO Alan Mulally said his company doesn't immediately need loans but is supporting GM and Chrysler to prevent a snowball effect of bankrupt suppliers, in which case it would then need about $9 billion to stay afloat. Chrysler CEO Bob Nardelli said his company needs about $4 billion to survive until the end of the year, while GM boss Rick Wagon said his firm would need about $4 billion by January and up to $10 billion through March.