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December 11th, 2008
10:05 PM ET

Bailout on the brink?

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/POLITICS/12/06/obama.jobs/art.ceos.gi.jpg caption="The chief executives of ailing automakers GM, Chrysler and Ford testify before Congress last week"]
Sources: White House warning GOP senators Wall Street bailout funds might be used for automakers.

Dana Bash
CNN Congressional Correspondent

Two Republican congressional sources tell CNN that Bush officials have been warning wavering Republican senators that if they don't support legislation to bailout big three automakers, the White House will likely be forced to use money passed for the Wall Street bailout, something the White House and Treasury Secretary Henry Paulson have refused to do.

 The sources asked not to be named because of the sensitivities of private conversations.

The White House negotiated a deal with Democrats to give Detroit a short term loan with strings attached, including a so-called "car czar" charged with helping the companies draw up restructuring plans. Most Senate Republicans opposed the plan as too weak in terms of focusing long-term viability for the U.S. auto industry.

As part of their full-court press to urge skeptical Republicans to back it, they made clear that if Congress didn't act, the White House would have to step in to save Detroit from collapse with funds from the $700 billion Troubled Asset Relief Program (TARP), according to the sources familiar with the conversations.

 One of the sources said the a White House official made clear to a GOP Senator that would be the worst option, because the loan could go to the auto companies with few or no requirements along with it.

 Democrats had pressed the White House from the start to help Detroit by using some of the 700 billion dollars for the financial sector, but the White House had refused.

 Talks are currently underway on another compromise auto bailout bill, so the White House threat may be moot.

 But it is noteworthy that Bush officials apparently raised the idea of using TARP money in some private conversations with skeptical Republican Senators.


Filed under: 360° Radar • Bailout Turmoil • Dana Bash • Economy • T1
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