Paulson voices opposition to Big 3 bailout bill

WASHINGTON (AP) - Treasury Secretary Henry Paulson told Congress on Tuesday that the administration remains firmly opposed to dipping into the government's $700 billion financial bailout fund for a $25 billion rescue package for Detroit's Big Three automakers, no matter how badly they need the help.

"There are other ways" to help battered automakers, Paulson told the House Financial Services Committee as the auto bailout legislation clung to life support on Capitol Hill.

Committee members grilled Paulson on the administration's stance that the $25 billion come from separate legislation passed by Congress, which was designed specifically to help auto manufacturers retool their factories so they can make more fuel-efficient vehicles.

The $700 billion plan enacted by Congress in October and signed into law by President George W. Bush did not envision that the program would be used to help rescue nonfinancial companies, Paulson said.

"I believe the auto companies fall outside of that purpose," he said.

At the same time, Paulson testified, "I think it would be not a good thing, it would be something to be avoided, having one of the auto companies fail, particularly during this period of time."

Paulson said that solving the financial problems of the automakers should be done in a way "that leads to long-term sustainable viability" for the industry.

Auto executives, backed by leading Democrats, insist they need another $25 billion in emergency loans - on top of the $25 billion already approved - to avert a collapse of one or more of their companies before year's end. That would bring the total federal help for the industry to $50 billion this year.

(Copyright 2008 by The Associated Press. All Rights Reserved.)