Auto Bailout Negotiations Fail in Senate, Reid Says

Auto Bailout Negotiations Fail in Senate, Reid Says (Update1)
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By Brian Faler and Jeff Green


Dec. 11 (Bloomberg) -- Senate negotiations for a U.S. automaker bailout plan collapsed, in a blow to General Motors Corp. and Chrysler LLC, which may run out of cash early next year.

“It’s over with,” Majority Leader Harry Reid said on the Senate floor in Washington. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.”

Reid said the Senate will take a procedural vote tonight on a House-passed plan, though he doesn’t expect it to be approved.

“This is going to be a very bad Christmas” for many people, Reid said. “The time for talking on this is over. We should vote and move on to something else.”

Asian stocks and U.S. index futures immediately began falling after Reid’s comments. The MSCI Asia Pacific Index slumped 2.2 percent to 86.13 as of 12:33 p.m. Tokyo time, while March futures on the Standard & Poor’s 500 Index slipped 3.4 percent.

Connecticut Democrat Christopher Dodd, who was involved in the negotiations, said the final unresolved issue was a Republican demand that unionized autoworkers accept a reduction in wages next year, rather than later, to match those of U.S. autoworkers who work for foreign-owned companies, such as Toyota Motor Corp.

“More than saddened, I’m worried this evening about what we’re doing with an iconic industry,” Dodd said. “In the midst of deeply troubling economic times we are going to add to that substantially.”

Republican Bob Corker of Tennessee, who negotiated with Dodd, said, “I think there’s still a way to make this happen.”

To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net
Last Updated: December 11, 2008 22:36 EST