Chrysler CEO Bob Nardelli will step down from the automaker's helm after the bankruptcy is completed. (Photo: Autocar)
The $14 billion rescue package for the U.S. car industry has failed in the Senate, as Republican law makers refused to budge over key aspects of the funding.
Car makers originally requested $34b in government loans to keep them trading and producing into March next year. The slimmed-down $14b package had been seen as a compromise that would allow support from Republicans and Democrats, including President George W. Bush and President-elect Barack Obama.
Democrat law makers had needed some Republican support for the bill, as they only hold a singe-vote majority in the Senate.
Republican senators said after the meeting that the bailout had been "about three words" from being passed, but they refused to support the package unless the United Auto Workers union, headed by Ron Gettelfinger, agreed to wage cuts before 2011.
In the aftermath of the deal's collapse, President Bush indicated he may reconsider allowing a portion of the $700b bailout monies targeted for the financial industry to go to the auto companies – something his administration had firmly resisted previously.
It's not clear how quickly the failure of the loans funding will affect GM and Chrysler – Ford is in a stronger financial position and had already withdrawn from the application. Reports in recent days have detailed how suppliers to the car makers have been asking for money up front or cash on delivery, because of concerns about the car makers' viability.
