By John Crawley
WASHINGTON (Reuters) - U.S. automakers could turn to Congress after the November election to try to expedite $25 billion in government-backed loans, which Detroit manufacturers consider crucial to reversing their steep downward spiral.
The prospect of an economic stimulus bill moving before year's end or in early January could provide an opening for General Motors Corp
"A stimulus package could be a vehicle for further steps. I think people will take another look at whether there is a need for more clarity," Alan Reuther, legislative director for the United Auto Workers, said.
Auto lobbyists do not discount the possibility of again working with sympathetic lawmakers on the loan issue, but note the chances of a stimulus package clearing the House of Representatives and Senate within the next few months are uncertain.
Democratic leaders in the House pushed the idea forcefully on Monday as a way to help stave off a recession many fear is near. President George W. Bush has so far resisted calls for a second stimulus plan.
A new Congress will be seated in early January and a new president will be sworn in weeks later.
Democratic presidential candidate Barack Obama, in Toledo, Ohio, where Chrysler has a plant, urged the Bush administration on Monday to "fast track" the loans. They cannot be issued until the Energy Department completes the necessary regulatory framework and other hurdles are cleared.
But the sinking American auto industry is urgently seeking certainty for its flow of capital as the global credit squeeze chokes its mainline and financing operations as well as suppliers and dealers. Weak sales fell further recently because consumers could not obtain financing. And, GM was forced to beat back bankruptcy speculation last week over mounting liquidity concerns.
"General Motors, Ford, Chrysler need help right now," John Engler, a former Michigan governor and president of the National Association of Manufacturers, told the Detroit Economic Club on Monday.
Engler called on the White House to intervene with the Energy Department on the loan program. The $25 billion in credit assistance was approved by Congress last month to help Detroit meet a new federal mandate for producing more fuel efficient cars and trucks.
Other lobbyists said they were working "to move the process along" but did not go as far as Engler.
Shares of GM, which plummeted last week, rose sharply on Monday on prospects of accelerated government aid or a merger to help it survive. Ford shares ended 20 percent higher after emerging from the weekend as the healthiest of the three distressed Detroit manufacturers. Chrysler is privately held and controlled by Cerberus Capital Management
Energy Department officials said they expect to have loan criteria in place by December as Congress ordered. But additional environmental and other hurdles associated with the types of advanced technology projects likely to be proposed for funding will lengthen the time for approving financing.
The agency said Congress could have streamlined the process by waiving one or more requirements but chose not to.
"We are following the law and addressing realistic expectations," said Healy Baumgardner, spokeswoman for Energy Secretary Sam Bodman.
GM, especially, is keeping its options open for possibly borrowing directly from the U.S. Federal Reserve. The automaker did not discount a report over the weekend that this move might be in its playbook.
Fed and U.S. Treasury officials, focused on shoring up the creaky banking system, offered no comment on prospects for making available direct longer-term loans to manufacturers.
Peter Morici, an economist and industrial policy expert at the University of Maryland, said Fed lending is ideally geared for banking needs, not providing direct loans to other businesses.
"It's not designed to be a general lending window," Morici said. "It's really Washington's job to break the log jam at the banks so that banks can start loaning money again."
(Additional reporting by Karey Wutkowski and Kevin Krolicki)
(Editing by Bernard Orr)