Bailout Update: Tuesday, December 9

Congressional Democrats have reached an agreement in principle with the White House on a rescue package for Chrysler, Ford and General Motors. An administration official and an aide to the Democratic leadership affirmed proposal addressed key points that have been raised in the dicussions but said there are some final issues to resolved and incorporated in the program.

The $15 billion bailout includes short-term bridge loans for Chrysler and GM and a line of credit for Ford which has said it doesn’t need financial aid at this time. The conditions include a requirement the Detroit automakers restructure or they will be allowed to fail. The government will also appoint an overseer to ensure compliance. The so-called “car czar” would be able to shape a restructuring of the companies and  withhold any further cash infusions if progress toward a turnaround failed to meet key benchmarks. The overseer could also recommend a Chapter 11 restructuring bankruptcy if the automakers are unable to get major concessions from labor and creditors.

Democrats plan to bring the bill before the House by Wednesday and then send it to the Senate for consideration where passage is not yet assured.