Long road led to automakers’ bailout

updated 1:53 p.m. ET Dec. 21, 2008

WASHINGTON - General Motors chief Rick Wagoner got the call at 8 p.m. a week before Christmas.

Bailout billions were on the way — finally — for his once mighty but now sinking company along with Chrysler LLC. Terms for $17.4 billion in bridge loans came through from Washington at around 2:30 a.m. and executives pored over the details until daybreak.

At least one wore the previous day's clothes as he watched President George W. Bush announce the aid at the White House on Friday.

It was hardly the first all-nighter that Detroit's Big Three auto executives, the United Auto Workers, and the officials in Washington had pulled in six weeks of drama leading up to the White House's announcement.

High-stakes talks unfolded against a backdrop of a battered economy and a historic transition from one presidential administration to the next as GM and Chrysler teetered on the brink of collapse, promising more pain — economic and political.

The negotiations were shaped by a bailout-fatigued postelection Congress; a lame-duck president worried about his legacy; and auto executives and unions scrambling to remake themselves as their industry's way of life slid toward oblivion. On the sidelines was President-elect Barack Obama, reluctant until the end to play a major role, although he will own the outcome.

The bailout began taking shape just after Election Day, Nov. 4. Executives from GM and Chrysler, which had been in merger talks geared toward stabilizing themselves, gathered in House Speaker Nancy Pelosi's ornate Capitol office with officials from Ford Motor Co. to say things were worse than they had initially thought.

They were burning through cash at an alarming rate, they told Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., and needed $25 billion just to stay afloat until New Year's.

Rep. John Dingell, D-Mich., at 82 the longest-serving member of the House, was in a wheelchair after recent knee replacement surgery and wearing a black warm-up suit at the late-afternoon meeting — the personification of the limping industry he was fighting to save.

By week's end Pelosi and Reid had fired off a letter asking Treasury Secretary Henry Paulson to tap the Wall Street rescue fund to help the carmakers. Bush's team said no — any aid would have to come from an existing $25 billion program for the production of fuel-efficient cars.

In the thick of the stalemate, Wagoner, Ford chief executive Alan Mulally and his Chrysler counterpart Bob Nardelli boarded private jets to make the trip from Detroit to Washington for high-profile congressional hearings to beg for the aid.

"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo," groused Rep. Gary Ackerman, D-N.Y.

Members of the House and Senate, many still smarting from the political sting of having backed the $700 billion bank bailout, were outraged.

So it wasn't too surprising when, days later, Democratic leaders scrapped votes on the auto bailout.

"Until they show us the plan, we cannot show them the money," Pelosi said.

The White House said Bush had "no appetite" to act on his own. Any rescue was off until after Thanksgiving.

Like underachieving children scolded by an irate teacher, the Big Three were given holiday homework: come back for another round of hearings with written restructuring plans in hand.

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