Bad economy hits Harvard, despite $37 billion endowment

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Dartmouth College has announced that it would cut spending after its endowment, which also makes up about a third of its budget, lost $220 million. Trustees blamed the loss on poor returns on stocks and bonds because of the Wall Street meltdown.

Last week, Brown University announced a hiring freeze through January and said it would review its capital budget to determine which projects could be delayed. Cornell University also recently announced a 90-day halt of construction projects and a pause on hiring staff members from outside the university through the end of March.

"Virtually every college and university, their budgets are under strain, stress, for a variety of reasons," said Matthew Hamill, a vice president of the National Association of College and University Business Officers.

Faust's spokesman declined to say much Harvard's endowment has lost during the current economic turmoil.

Faust noted in an e-mail to faculty, staff and students that Moody's, the financial research and ratings service, has projected a 30 percent decline in the value of college and university endowments in general in this fiscal year. If that were applied to Harvard's endowment it would mean a drop of $11 billion, but because Harvard's endowment is so large and so diversified it is more insulated from market volatility.

In the fiscal year that ended June 30, Harvard's endowment posted an 8.6 percent return and grew to $36.9 billion. However, the school lost 12.7 percent on its U.S. stock portfolio and 12.1 percent on its foreign equity portfolio during that time.

Faust warned in her e-mail that "we must recognize that Harvard is not invulnerable to the seismic financial shocks in the larger world. Our own economic landscape has been significantly altered."

The school still intends to implement initiatives to make education affordable to students from low- and middle-income families, and will ensure that those with income below $60,000 will pay nothing to send children to Harvard College. Those earning up to $180,000 can expect to pay no more than about 10 percent of their income, she said.

Graduate and professional schools will keep financial aid budgets at current levels.

美国救市资金仅剩600亿美元 众巨头濒临破产(图)

据香港商报报道，随著愈来愈陷入困境的公司暗示需要得到资助，美国政府的金融体系救市计划也面临著巨大压力，资金捉襟见肘。据知情人士透露，财长保尔森计划本周后期公布救市计划的最新进展情况，并可能会专注于资本投资。 

获美国政府拯救的房贷巨擘房利美第三季度共亏损了290亿美元(约2,260亿港元)，并表示其现金消耗速度非常快，可能在年底前需要财政部再注入现金。另一个显示金融公司所面临困境的迹象是，美国运通公司转变为银行控股公司的申请迅速获得了联邦储备局的批准。此举为这家信用卡巨头从财政部获得纳税人资金的注入铺平了道路。

一直在积极游说政府资助的通用汽车公司亦称，如果其财务状况不能保持稳定，可能会在年底前无法偿还部分到期债券。

-美国财政部部长助理卡什卡里施压，要求银行放贷。路透社

仅剩600亿美元 

这种此起彼伏要求资助的呼声可能给布什政府带来扩大“问题资产救助计划”(TARP)范围的压力。这项7,000亿美元的计划是在10月份获国会通过后，财政部不理国会极力游说，一直拒绝向美国汽车制造商开放TARP。

在国会按照TARP计划批准的首批3,500亿美元(约2.7万亿港元)资金中，财政部目前还剩下600亿美元(4,680亿港元)。面对愈来愈多公司财困，保尔森向国会申请另一半救助资金的可能性大大提高。消息人士透露，保尔森计划本周后期公布救市计划最新进展，可能专注于资本投资。

另外，美国经济陷入危机，但政府拍卖政府债券预期将会吸引大量需求，财政部本周将出售550亿美元(约4,290亿港元)政府债券，为救市措施融资。

坏消息频传 美股再挫 油价创20个月来新低

导读： 

美企频传坏消息 金融危机冲击实体经济 

快讯：纽约股市11日继续下滑

欧洲股市11日收盘大幅走低

快讯：11日纽商所12月黄金期货价格下跌1.8%

国际油价11日创出20个月来新低

美企频传坏消息 金融危机冲击实体经济 

通用面临破产危险 AIG爆出巨亏 电子零售商申请破产保护 

美车企巨头通用汽车公司(GM)继上周五发布巨额亏损后，周一股价盘中一度狂跌31%，到达62年低点。通用汽车在一份提交给政府的文件中承认，如果在今年年底前无法稳定其日益恶化的财务状况，它很可能被迫破产。危急关头，通用汽车步步紧逼联邦政府要求其出手金援，该公司董事长兼首席执行长瓦格纳表示，"通用汽车需要在当选总统奥巴马1月20日就任前获得财务上的帮助"。

通用汽车财政恶化并不是一个个案。最近一段时间，美国企业界频频传出坏消息。近期集中爆出巨额亏损的还有美金融巨头美国国际集团(AIG)以及房贷巨头房利美；昨日美第二大电子产品零售商电路城(Circuit City)申请破产保护；华尔街也在酝酿涉及7万人的大手笔裁员。分析人士指出，来自金融业和企业界的糟糕消息凸显出这场危机的范围正不断扩大，"此次危机的首批受害者是银行和保险公司，如今正扩大到全球经济的其他领域"。

通用乞求政府金援 

周一通用汽车股价重挫至62年低点，反映了外界对这家汽车厂商可能会陷入现金流枯竭、被迫申请破产保护境地的担忧。通用汽车日前表示，一旦违反债务合约，债权方有权要求其偿还60亿美元债务，这个金额可能会使这家汽车厂商不得不申请破产保护。

德意志银行的分析师拉奇在一份报告中写道，如果没有政府的帮助，通用汽车的崩溃将不可避免，它还可能导致汽车厂商、供应商、零售商以及美国经济其他领域面临难以克服的系统性风险。 

周一，通用汽车和同情其境遇的国会议员们大力呼吁联邦政府，要求其出手救助。国会议员们建议，作为对救助的回报，政府可以入股这家汽车厂商、限制其高管薪酬，并要求通用汽车加快推出节油型汽车的步伐。 

瓦格纳对行业刊物《汽车新闻》表示，通用汽车需要在当选总统奥巴马1月20日就任前获得财务上的帮助，但他拒绝以辞职作为获得救助的交换条件。

在华盛顿，密歇根州国会代表致函美国财政部长保尔森，敦促后者从7000亿美元金融机构救助资金中拿出一部分为三家美国汽车巨头提供低息贷款。布什政府迄今尚未同意上述提议，并指出已经通过能源部负责的一个项目向汽车行业提供了250亿美元来提振节能型汽车的生产。奥巴马虽已表示支持救助汽车厂商，但尚未公布具体措施。

通用汽车股价周一在纽约证交所收低1美元至3.36，此前一度下滑至3.02美元，为1946年以来最低。巴克莱将通用汽车的评等由"中性"调降至"减持"，并将其目标股价由4美元调降至1美元。该行称，通用汽车到2008年底的现金水平预期为133亿美元，到明年第一季度将低于110亿-140 亿美元的最低额度。尽管政府在财政上的救助能帮助通用走出困境，但巴克莱分析师约翰逊在研究报告中称，这将明显稀释通用汽车的股权。德意志银行将通用汽车的评等由"持有"调降至"卖出"，并将其股权估值由4美元调降至零，称通用汽车12月以后可能很难为其运作募集到资金。

上周五，通用汽车公布，第三财季亏损25亿美元。该公司还表示，当季使用流动资金69亿美元，现金储备因此下降至162亿美元。通用汽车称，至少需要110亿美元至140亿美元来维持业务运转。

与通用并称为"底特律三巨头"的福特和克莱斯勒同样现金流告急，同时向政府乞求援助，希望在国会此前拨款250亿美元的基础上再提供250亿美元低息政府贷款。

金融巨头频报巨亏 

处于重灾区的金融行业频频爆出巨额亏损。 

10日，美国住房抵押贷款融资巨头房利美发布其被政府接管以来的首份季报。报告显示，今年第三季度该公司净亏损290亿美元，创年内美国各公司亏损额之最。

财报显示，房利美第三季度的信贷损失达到92亿美元，远高于去年同期的12亿美元。截至9月底，其资产净值已经从去年年底的441亿美元骤降至94亿美元。

房利美预计，其资产净值或将在下个季度末由正转负，从而不得不寻求政府资助。该公司称，截至11月7日，其并未动用任何政府援助。

美国财政部9月初宣布接管陷入困境的房利美和房地美，并承诺如有需要，财政部将向这两家机构分别注入高达1000亿美元的资金。

但房利美表示，如果公司进一步出现重大亏损，或者没有能力出售那些无担保债务，那么财政部承诺的1000亿美元注资有可能不足以使公司避免破产命运。

同一天，美国国际集团(AIG)发布财报说，今年第三季度该集团亏损245亿美元，而去年同期为盈利30.9亿美元。其中，信贷违约互换(CDS)业务当季的资产减记额超过70亿美元。

在美国国际集团(AIG)公布巨额季度亏损后，美国政府及美联储将对AIG的救援金额提高至1500亿美元以上。

由于次贷危机导致AIG陷于破产边缘，美联储9月份宣布向该集团提供850亿美元紧急贷款，同时美国政府获得AIG近80%的股份，正式接管这家全球最大的保险公司。

美国救市资金仅剩600亿美元 众巨头濒临破产(图)

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美电子零售商申请破产 

临近年底消费旺季，原本应该是零售商们大赚一笔的好机会，但就在周一，美国第二大消费电子零售商电路城(Circuit City)申请破产保护，成为自2002年凯马特以来根据破产法第11章申请破产保护的最大零售商。自2007年1月以来，该公司股价已缩水99%，目前股价不到50美分，周一该股在纽约证交所停牌。

当天，总部位于弗吉尼亚的"电路城"公司根据破产法第11章向当地法院申请破产保护。在向法院提交的破产申请中，公司首席财务官布鲁斯·贝赞可承认，供货商信心衰减、流动性问题以及全球金融危机是导致公司破产的主要原因。他说，如果问题不能得到及时解决，公司将无法获得供货来满足年末消费旺季的销售，这将对公司乃至股东造成损害。

不过，业内人士认为销售不畅以及公司流动资金短缺无法解决商店租金问题是导致其申请破产的主要原因。 

截至今年8月31日，拥有59年历史的"电路城"公司的财务报表显示公司资产为34亿美元，债务为23.20亿美元。申请破产后，公司获准暂停支付150家商店的租金，这些费用大约为4000万美元。

在此前一周，"电路城"曾宣布将在年底前关闭旗下五分之一(共155家)的连锁店，同时裁员7300人。

分析人士认为，如果"电路城"能够处理好与供货商关系以及商店用地租赁等事宜，公司最早有望于明年夏天走出破产保护，最终决定是否继续独立运作或被人收购。此前，该公司的主要对手--美国第一大消费电子产品零售商"百思买"曾表示有意收购对手。不过，由于"电路城"为了缓解危机可能在圣诞购物旺季期间甩卖存货，"百思买"的销售情况将受到影响，公司前景尚存变数。

华尔街近7万人将失业 

目前正值下一年财务预算制定之时，受金融市场动荡及2009年经济形势可能进一步恶化的影响，华尔街将展开新一轮裁员风暴。预计金融部门将裁掉7万人，而据估计在之前全球金融行业已裁员15万人之多。

预计新一轮裁员将主要集中于投资银行业和证券交易部门，而上述部门已经经历了资本市场几乎冻结及破产收购等一系列事件的打击。 

银行业的持续萎缩将进一步加剧纽约、伦敦和香港等全球金融中心的灾难，他们的税收大幅缩水，同时对当地的房地产市场也形成极大压力。"第四季度破坏性非常巨大，"Oppenheimer分析师梅雷狄斯·惠特尼表示，"许多业务集中于资本市场的机构裁员比例将达25%至30%。"

上周，高盛启动裁员10%的计划。据彭博数据，美林已裁员5700名，占员工总数近9%，摩根士丹利已裁员4400名。据估计，此前在贝尔斯登和雷曼兄弟倒闭后，已有2.3万员工失去工作。花旗集团也正拟定新一轮裁员名单。

多数银行拒绝就其裁员计划置评，表示迄今尚未最终敲定。但业内人士表示，未来将出现更多裁员，因金融业第四季度收入继续下滑，同时几乎没有显示出任何明年将出现好转的迹象。一位公司高层表示，根据公司的估计，美国金融业下一轮裁员的数额估计超过7万人。据美国联邦储备署的最新一项研究显示，今后几年内，仅纽约市的金融行业将裁减5.5万-7.8万个职位。

新华网：由于企业盈利下滑幅度超过市场预期，纽约股市11日继续下滑，三大指数跌幅均在2%左右，其中道琼斯指数下跌超过170点

欧洲股市11日收盘大幅走低

欧洲股市11日收盘大幅走低，有关全球经济放缓的担忧拖累银行及石油类股下挫。英国富时100指数跌3.6%，德国DAX 30指数跌5.3%，国CAC-40指数跌4.8%。

综合外电11月11日报道，欧洲股市11日收盘大幅走低，主要因为有关全球经济放缓的担忧拖累银行及石油类股下挫。

道琼斯斯托克600指数跌4%，至212.17点，连续两个交易日的涨势由此中止。英国富时100指数跌3.6%，至4,246.69点。德国DAX 30指数跌5.3%，至4,761.58点。法国CAC-40指数跌4.8%，至3,336.41点。

欧洲市场中，大型油气股跌幅居前，一改周一上涨态势，原因是在有关经济放缓将抑制大宗商品需求的担忧拖累下，原油期货跌破每桶60美元。BG Group跌11%；道达尔(Total)跌7.2%。

11日公布的疲弱经济数据显示，英国10月份房屋销售量跌至英国皇家特许测量师学会(Royal Institution of Chartered Surveyors)自1978年开始统计以来的最低水平。另据英国零售商协会(British Retail Consortium)的数据，英国10月份零售额下挫2.2%。

德国方面，11月份ZEW经济预期指数从10月份的-63点升至-53.5点，不过仍远低于历史平均水平27点。

银行类股受到冲击，意大利的情况尤为明显，其中，Intesa Sanpaolo收盘下挫近17%，UniCredit收盘跌11%。

西班牙国家银行(Banco Santander, STD) 和汇丰控股(HSBC Holdings, HBC)继续延续10日跌势，分别下挫7.1%和5.3%。

美林(Merrill Lynch)和瑞士信贷(Credit Suisse)均下调了对汇丰控股的评级，而西班牙国家银行的评级也遭到WestLB下调。

无线电信巨头沃达丰空中通讯公司(Vodafone Group, VOD)涨6.2%，该公司上调本财年现金流预期及宣布10亿英镑成本节省计划受到投资者欢迎。

快讯：11日纽商所12月黄金期货价格下跌1.8%

新华网快讯：11日纽约商品交易所12月份交割的黄金期货下跌13.7美元，报收于每盎司732.8美元，跌幅为1.8%。(新华网)

国际油价11日创出20个月来新低

新华网纽约11月11日电(记者 杨蕾)对世界经济衰退影响能源消费的担心使国际油价11日再度大幅下跌，纽约市场油价收盘价跌破每桶60美元，创出20个月来新低。

当天，纽约商品交易所12月份交货的轻质原油期货价格下跌3.08美元，收于每桶59.33美元，是自2007年3月以来的最低收盘价格。伦敦国际石油交易所12月份交货的北海布伦特原油期货价格下跌3.37美元，收于每桶55.71美元。

油价11日创出新低的最主要原因仍然是投资者担心全球经济衰退抑制能源消费。当天，由于企业盈利下滑幅度超过市场预期，纽约股市三大指数跌幅均在2%左右，加剧市场对美国经济衰退情况的担忧。

此外，由于有关全球经济的负面消息不断出现，当天美元在避险情绪支持下对多数主要货币上涨，被市场作为对冲美元贬值风险的原油期货也随之下跌。 

11日，纽商所12月份交货的汽油期货价格每加仑下跌6.11美分，收于1.3059美元。12月份交货的取暖油期货价格每加仑下跌7.1美分，收于1.9290美元。12月份交货的天然气期货价格每千立方英尺下跌53.5美分，收于6.705美元。

Paulson: Government won't buy troubled bank assets 

WASHINGTON – The government has abandoned the original centerpiece of its $700 billion rescue effort for the financial system and will not use the money to purchase troubled bank assets.

Treasury Secretary Henry Paulson said Wednesday that the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending. He also announced that the administration was looking at a major expansion of the program into the markets that provide support for credit card debt, auto loans and student loans.

Paulson said 40 percent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt. He said these markets need support.

"This market, which is vital for lending and growth, has for all practical purposes ground to a halt," Paulson said.

On the issue of using the $700 billion bailout package to provide help to ailing auto companies, Paulson said the administration preferred an approach that would accelerate support to that industry from other legislation Congress passed this fall.

Paulson said the administration is exploring other options, including expanding the program beyond banks to nonbank financial institutions which provide essential credit to both businesses and consumers. He suggested that capital could be provided to institutions on a matching basis in which the government would supply money to those able to raise money on their own.

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Providing an update on the largest government bailout in U.S. history, Paulson said that the effort was showing results but that more efforts were needed given the most severe downturn being faced in housing.

"Our financial system remains fragile in the face of an economic downturn here and abroad," Paulson said. "Market turmoil will not abate until the biggest part of the housing correction is behind us. Our primary focus must be recovery and repair."

The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was "not the most effective way" to use the $700 billion bailout package, he said.

The announcement marked a major shift for the administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.

The bailout money also should be used to support efforts to keep mortgage borrowers from losing their homes because of soaring default levels, he said.

A proposal to have part of the bailout funds used to guarantee mortgages that have been reworked to reduce monthly payments for borrowers is an approach the administration continues to discuss, Paulson said, although he indicated it would not be a part of the rescue program. He said it went beyond the intent of the legislation Congress passed on Oct. 3.

Asked about what he had in mind to expand the rescue effort to support credit card and other types of consumer debt that is backed by selling securities, Paulson said it would probably take weeks to design the new program and then more time to get it implemented, a possible sign that any such proposal would have to be implemented by the incoming administration of President-elect Barack Obama.

Speaking of the first-ever summit of leaders of the Group of 20 major industrial and developing countries, Paulson said this weekend's meeting needs to focus first on how to repair the financial system as a way to bolster the global economy.

Elsewhere, Paulson praised a new set of guidelines issued Wednesday by the Federal Reserve and other bank regulators, saying that they addressed a crucial issue of making sure that banks continue to lend at adequate levels.

The guidelines urge institutions to continue lending to credit worthy borrowers and to work with mortgage borrowers to avoid defaults. In addition, the guidelines encourage the banks to set dividend payments for shareholders and compensation for executives with the current crisis in mind.

The guidelines address criticism that banks obtaining funds from the $700 billion rescue plan could simply use the money for their own purposes rather than helping struggling homeowners and the overall economy.

Critics are concerned that banks, which are getting $250 billion through government purchases of their stock, are not using the money to boost lending to customers, one of the main reasons why the economy is in a crisis.

"If underwriting standards tighten excessively or banking organizations retreat from making sound credit decisions, the current market conditions may be exacerbated, leading to slower growth and potential damage to the economy," according to the regulators' guidance.

The Fed, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, and Office of Thrift Supervision said all financial institutions were expected to follow the new guidelines, even those not receiving federal assistance.

The Bush administration already has committed $250 billion of the $700 billion rescue fund for the purchase of bank stock, giving financial institutions an infusion of cash the government hopes they will use to resume more normal lending operations and address the most severe credit crisis in decades. On Monday, the administration announced that it was allocating another $40 billion as an investment in troubled insurance giant American International Group.

Those decisions leave only $60 billion of the initial $350 billion left to allocate. To access the second $350 billion, this administration or the next will have to make a request to Congress for the money.

Paulson: Bailout package not designed to help automakers

WASHINGTON – Treasury Secretary Henry Paulson called autos a "critical industry in this country" on Wednesday but said the government's $700 billion financial rescue program wasn't designed to help automakers.

Asked about Democratic congressional leaders' plan to rush financial aid to the industry, Paulson cautioned that "any solution has got to be leading to long-term viability" for auto companies.

He said Congress could try to make funding more available to the auto industry as part of a $25 billion loan program approved in September to develop fuel-efficient vehicles.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are pushing for something more sweeping to help the industry, which is suffering under the weight of poor sales, tight credit and a sputtering economy.

Pelosi said Tuesday she was confident that lawmakers meeting next week in a lameduck session would consider "emergency and limited financial assistance" for the auto industry under the $700 billion bailout measure that passed Congress in October. She urged the outgoing

Bailout Improv: Paulson Rolls Out New TARP

With the first half of the $700 billion TARP program nearly depleted, Treasury Secretary Hank Paulson spoke today to both defend the program, and announce some changes going forward.

Paulson's comments come amid criticism of his handling of the bailout and a political battle over whether the government should rescue U.S. automakers. Assuming the answer is "yes", the debate — starting as early as next week in a lame-duck session — will be over whether or not the funds come from the second $350 billion of TARP money, which requires Congressional authorization (however it's used.)

As for Paulson's defense of TARP: "As I assess where we are today, I believe we have taken the necessary steps to prevent a broad systemic event," Paulson said in prepared remarks. "Our system is stronger and more stable than just a few weeks ago. Although this is a major accomplishment, we have many challenges ahead of us."

Key changes to the program, which Paulson hopes will address the ongoing challenges of "a weak economy, especially the housing correction and lending contraction," include:

• Paulson has effectively abandoned the idea of buying bad debt from banks. While this is a step in the right direction, it's an amazing 180-degree turn in a few short weeks.

• Companies like American Express seeking TARP capital going forward may be required to raise private capital first. Again, this is an improvement but notably doesn't apply retroactively to the firms already enjoying government largess.

These changes appear smart, but the bottom line is the government is essentially making this bailout up as it goes along. "Since announcing the [injection of capital into big banks] we have been examining a wide range of ideas that can further strengthen the financial system and get lending going again to support the broader economy," Paulson said.

It's also clear that Paulson still doesn't have the answers ... and maybe not even a clue, which he unwittingly admitted today: "And to adequately reform our system, we must make sure we fully understand the nature of the problem which will not be possible until we are confident it is behind us," he said.

Huh? No wonder Paulson is counting down the days until he's "former Treasury Secretary."

Democrats urge federal stake in Big Three car companies

WASHINGTON – Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., hope for quick passage of the auto bailout during a postelection session that begins Monday.

Legislation being drafted by Rep. Barney Frank, chairman of the House Financial Services Committee, would dip into the $700 billion Wall Street rescue money, approved by Congress last month, for the auto aid.

President Bush is cool to that idea. But the White House says he is open to helping the industry, which is buckling under poor sales, tight credit and a sputtering economy.

In an Oval Office meeting Monday, President-elect Obama spoke to Bush about doing more to aid the industry, aides said, and Bush said he was open to it.

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Any effort to throw the companies a lifeline could run into GOP roadblocks that could derail it in the Senate. In that chamber, Republicans, including some who believe their votes for the Wall Street bailout hurt, and in some cases doomed, their re-election bids, are loath to agree to any new money.

Sen. Mitch McConnell, R-Ky., the minority leader, was noncommittal about additional aid. In a statement, his spokesman said Congress should move to speed the release of a $25 billion loan program passed earlier to help the carmakers develop fuel-efficient vehicles.

"It may be that there are changes that need to be made in order to expedite these low-interest loans. Other ideas have been floated and all will receive a review as we approach the Senate's return next week," said Don Stewart, the spokesman.

Treasury Secretary Henry Paulson said Wednesday the auto sector was "critical," but that the financial industry rescue was not designed for car companies.

"Any solution has got to be leading to long-term viability" for auto companies, Paulson said.

He also suggested Congress could try to use the loan program already in place to help the companies.

But Democrats say those loans were designed to help automakers adapt to new fuel standards, not to stave off the financial disaster the companies now say is imminent.

Sen. Carl M. Levin, D-Mich., is working with Frank, D-Mass., on the auto bailout.

White House press secretary Dana Perino said the administration is not responsible for the automakers' woes but understands the importance of the industry. Officials are reluctant to make any proposals for new aid, suggesting the companies hold much of the responsibility for their own survival.

The companies have made business decisions "over the years that have led to this situation, but we have gone as far as we can with the authority Congress has given in order to help industries," Perino said.

Frank's legislation would carve out a portion of the $700 billion financial rescue program for the Big Three automakers, letting the government take an equity stake in them in exchange for the loans, said Frank's spokesman, Steven Adamske.

The Treasury could take warrants to share in a portion of future profits and would have to be paid back before any other shareholder. The car companies would face tougher restrictions on awarding pay packages to executives and dividends to their shareholders than the financial companies that get a piece of the original bailout.

Auto executives, labor leaders and other industry proponents are mounting an intense lobbying effort for a bailout, painting a grim scenario for the economy if even one of the Big Three companies were to go under. They want an immediate $25 billion loan to keep the companies operating and a separate $25 billion to help cover future health care obligations for retirees and their dependents.

The Big Three and United Auto Workers will have a high-profile chance to make their case at a hearing next Wednesday before Frank's committee, where executives from Chrysler LLC, Ford Motor Co. and General Motors Corp. and a UAW leader are scheduled to testify Wednesday.

"It is critical that the nation understand this isn't just a Michigan problem, that one in 10 jobs in the country are impacted by the auto industry," Michigan Gov. Jennifer Granholm said in an interview.

A House vote on Frank's measure could come as early as next Thursday.

Democratic leaders also are considering pairing the measure with a broader economic aid bill including money for unemployed workers whose jobless benefits have run out, aides said. It was not clear whether such legislation could get enough support to pass.

Pelosi on Tuesday urged "immediate action" for the industry, while Reid noted it would only happen with bipartisan support from Bush and Senate Republicans.

Her request came less than a week after GM and Ford posted bleak third-quarter earnings reports. GM, the nation's largest automaker, posted a $2.5 billion quarterly loss Friday and warned that it may run out of money by the end of the year without government aid.

"We're in a situation where there's a great unknown about what will happen," said Sen. Debbie Stabenow, D-Mich. "And a great concern that at least one of the companies will find themselves in a situation where they cannot make it until Jan. 20," when President-elect Obama is inaugurated.

Democratic leaders will need to convince some skeptical lawmakers who question whether a bailout would cause changes in the auto industry or simply lead to more handout requests from other industries.

"Once we cross the divide from financial institutions to individual corporations, truly, where would you draw the line?" asked Sen. Jeff Sessions, R-Ala.

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Democrats seek auto aid as treasury shifts rescue focus

WASHINGTON – Urgently shifting course, the Bush administration is abandoning the centerpiece of its massive $700 billion economic rescue plan and exploring new ways to shore up not only banks but credit-card, auto-loan and other huge nonbank businesses. Democrats are pressing hard to include a multibillion-dollar bailout for faltering automakers, too — over administration objections. Unimpressed by any of the talk on Wednesday, Wall Street dove ever lower.

"The facts changed and the situation worsened," Treasury Secretary Henry Paulson said at a news briefing, explaining the administration's switch from its original plan to help financial institutions by buying up troubled assets, primarily securities backed by bad home loans.

Despite its new flexibility, the administration remained opposed to using the rescue fund to bail out the ailing auto industry or to provide guarantees for home loans, an idea that supporters contend offers the greatest hope for helping legions of Americans who are facing foreclosure.

Congressional Democrats felt otherwise on autos, and strongly. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid were pressing for quick passage of a major package for carmakers during a postelection session that begins next Tuesday, and one key House

The options for federal help to U.S. automakers- AP

Auto companies, the United Auto Workers union, lawmakers and the Bush administration have discussed several options for helping U.S. automakers avoid bankruptcy amid the weak economy and sluggish auto sales. A look at some of the ideas under consideration to help General Motors Corp., Ford Motor Co. and Chrysler LLC:

-- $25 billion in emergency funding from the $700 billion financial industry bailout Congress passed in July. Key Democrats are writing a bill to amend the bailout law to provide $25 billion in loans to the Big Three auto companies in exchange for equity stakes in them. The government has committed to providing $290 billion to banks and insurance giant American International Group Inc. through similar equity stakes. President Bush and Treasury Secretary Henry Paulson say the $700 billion should be used only to aid the financial sector.

-- $25 billion in emergency borrowing from the Federal Reserve. Some industry officials have suggested low-rate emergency borrowing from the Federal Reserve's discount window, which is limited to banks in normal times, as an alternative if they can't win sufficient political support for dipping into the $700 billion for financial company bailouts.

-- Rework a separate $25 billion loan program originally intended to help pay for retooling auto plants to build more fuel-efficient vehicles. Congress approved the loan program for domestic automakers and suppliers as part of the 2007 energy bill and funded it with $25 billion in September. The Energy Department recently released regulations on the loan program and the companies still need to apply for money for individual projects. The Bush administration favors Congress reworking this program to expedite the loans.

-- $25 billion to cover future health care obligations. The UAW has urged Congress to approve $25 billion in loans to help automakers meet health care obligations for more than 780,000 retirees and their dependents. Under a labor agreement last year, the companies are required to provide $15 billion to a health care fund for retirees in January 2010 and another $15 billion in 2012. The union maintains that those obligations on the auto companies' books have scared away private lenders.

-- Tax incentives to boost consumer demand for new cars. Sen. Barbara Mikulski, D-Md., proposed legislation Wednesday that would let new vehicle owners deduct sales and excise taxes and the interest on auto loans from their income taxes. The measure would be temporary, applying to the remainder of 2008 and through the end of 2009.

Failure of auto industry could set off catastrophe- AP


DETROIT (AP) -- Advocates for the nation's automakers are warning that the collapse of the Big Three -- or even just General Motors -- could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue.

Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation's largest automakers, which are struggling to survive the steepest economic slide in decades.

"We've got to do this because the cost of inaction is so high to communities, to workers, to companies," said Sen. Sherrod Brown, a Democrat from Ohio. He was among many lawmakers worried that an industry collapse would be devastating for everything from school districts to small businesses.

Even if just GM collapsed, the failure could bring down the other two companies -- and even the U.S. operations of foreign automakers -- as parts suppliers run out of money and shut down.

Concern about the automakers hit new heights Friday when GM and Ford reported they spent a combined $14.6 billion more than they took in last quarter. GM said it could run out of money by the end of the year.

Ford said it could last through 2009, but only because it arranged a hefty credit line last year.

All this comes after tight credit and economic uncertainty in October reduced U.S. auto sales to their lowest level in 25 years -- with no rebound in sight.

If the industry failed, among the hardest-hit communities would be Lordstown, Ohio, a village of 3,600 people about 50 miles east of Cleveland that has been home to a GM factory since 1966.

If the plant closed, Lordstown would lose up to 70 percent of its budget, a scary scenario that proponents of a multibillion dollar bailout say would be repeated across the industrial Midwest.

"If they went completely under, obviously it would financially devastate us," said Michael Chaffee, a school teacher and Lordstown's part-time mayor. "It would be catastrophic for our whole area."

Without GM and nearby parts factories, he said, Lordstown's $4.2 million budget would take about a $3 million hit that would almost certainly require layoffs of police and drastic cuts in park programs.

A study by the Center for Automotive Research in Ann Arbor estimated that the failure of Chrysler LLC, Ford Motor Co. and General Motors Corp. would eliminate up to 3 million jobs, including those at parts suppliers and smaller businesses that rely on the automakers.

State, local and federal governments would lose more than $150 billion in tax revenue over three years, the study said.

Next week, Congress plans to consider giving the auto industry part of the $700 billion Wall Street bailout during a lame-duck session.

Opponents of the idea say government money will just delay the inevitable demise of companies that are on death's doorstep because of years of mismanagement and labor costs that are far higher than their global competitors.

"How is this money going to make a positive difference in creating a new competitiveness?" asked Sen. Jeff Sessions, an Alabama Republican.

Sessions and others also fear that opening the treasury to automakers will invite more industries to plead for federal help.

"Once we cross the divide from financial institutions to individual corporations, truly, where would you draw the line?" said Sessions, who also opposed the Wall Street bailout.

Automakers say bankruptcy protection is not an option because people would be reluctant to make long-term car and truck purchases from companies that might not last the life of their vehicles.

But Sessions and others say Chapter 11 might be a better option than government loans. Airlines, Sessions said, have reorganized through bankruptcy, and the auto industry could do the same, protected from creditors and lawsuits while companies work to become profitable.

"I would prefer they would go through a reorganization process, and sometime in that process, if targeted aid might be effective, I would consider it," he said. "It seems like the larger the amount of money that's being spent, the less attention anybody pays to how it's spent."

Automakers say they are poised to rebound because they have been restructuring for years -- shedding jobs, consolidating engineering and design, and making plants more efficient. The Big Three have cut their combined U.S. hourly work force more than 40 percent since 2005, from 244,000 to about 139,000.

David Cole, chairman of the Center for Automotive Research, said Detroit is losing money now because it has too many factories making more vehicles than the market is buying. As a result, it must discount with incentives to sell them.

But as factory cuts take effect, automakers will see more profits -- about $2,000 per vehicle -- because they won't have excess cars and trucks and won't have to discount, Cole said. But that means consumers will probably pay more for cars in the future.

The increased profits, coupled with about $1,000 per vehicle in savings from a cost-cutting contract with the United Auto Workers, will allow automakers to repay debt to existing creditors plus the government, Cole said.

"The earning potential of this industry has the potential of covering that debt surprisingly fast," he said.

Brown, the Ohio senator, said letting the industry collapse would also be a national security risk, eliminating companies that were essential in two world wars.

"If we ever need that national security production for serious defense, for any kind of significant war, it's gone," he said.

If a bailout is approved, it's likely to come with significant strings attached. Even proponents like Brown would like to see limits on executive pay and a ban on shareholder dividends. Others have suggested management changes and tougher fuel economy requirements.

But back in Lordstown, people just want to the government to act.

Joellen Spletzer, owner of a convenience store about a mile from the GM plant, can't understand how Congress could quickly bail out Wall Street but balk at helping an industry that supports so many people.

"I'm not talking about my little store on the corner," she said. "It will affect people in so many widespread ways it's unbelievable."

Associated Press Writer Ken Thomas reported from Washington.