Nov. 18 (Bloomberg) -- Ford Motor Co. Chief Executive Officer Alan Mulally led industry CEOs' personal push for $25 billion in emergency loans as details of the aid plan circulated on Capitol Hill and Senate approval this week remained in doubt.

A bankruptcy of one automaker is a ``real serious concern'' for the others, Mulally said today in an interview on CNBC. When asked whether a bankruptcy filing would mean a liquidation and not a restructuring, he said, ``I sure think so.''

Congressional Democrats unveiled proposals yesterday, one bill in the House, another in the Senate, that would tap the $700 billion bank rescue package, giving seven to 10-year loans to domestic automakers and their suppliers. Taxpayers in return would get stock warrants, pay limits for top company executives and assurances that automakers would build more fuel-efficient vehicles.

The Bush administration opposes using money from the Treasury's Troubled Asset Relief Program to make the loans. White House spokeswoman Dana Perino yesterday repeated criticism that the plan wouldn't force automakers to improve and would divert funds intended to bolster financial markets.

``We're surprised that Senate Democrats would propose a bailout that fails to require automakers to make the hard decisions needed to restructure and become viable,'' Perino said in an e-mail. The plan amounts to a ``raid'' on money ``needed to stabilize our financial system and encourage new lending to help our economy,'' the statement said.

Making Their Case

Mulally and CEOs Richard Wagoner of General Motors Corp. and Robert Nardelli of Chrysler LLC are scheduled to testify today at a hearing held by Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat.

Ford would use government aid only if ``things get worse'' and the company exhausts its reserves, Mulally told CNBC.

The hearing comes less than two weeks after auto chiefs pushed for aid in meetings with legislative leaders. They will make their case tomorrow in the House at a hearing chaired by House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat.

GM, Ford and Chrysler are seeking aid as industrywide sales have plummeted to a 17-year low. GM this month said it lost $4.2 billion in the third quarter and almost $73 billion since the end of 2004, and that it may not have enough cash to get through the year.

Selling Assets

The automakers are selling investments to get funds. Ford today said it had agreed to sell 20 percent of Japanese affiliate Mazda Motor Corp., raising about $540 million. GM also today completed the 22.4 billion yen ($233 million) sale of its 3 percent stake in Suzuki Motor Corp.

GM said yesterday it will delay incentive reimbursements to its 6,468 U.S. dealers by about two weeks to preserve cash. The biggest U.S. automaker isn't disclosing the savings, a spokesman, John McDonald, said in an interview. Dealers were notified by e-mail yesterday, McDonald said.

``We are seeing a potential meltdown in the auto industry, with consequences that could directly impact millions of American workers and cause further devastation to our economy,'' Senate Majority Leader Harry Reid said on the Senate floor.

Reid said he will push for passage of the aid this week. The plan may need 60 votes to prevent lawmakers from delaying the bill in endless debate. Democrats hold a 50-49 edge, meaning even if all Democrats supported the measure, ten Republicans would also need to back it.

Republican Opposition

Senate Republicans including Richard Shelby and Jeff Sessions of Alabama, James DeMint of South Carolina and John Cornyn of Texas have criticized the proposal.

``I wouldn't support a bailout under just about any circumstances,'' Shelby said on Bloomberg Television yesterday. ``The fundamental problem is the management, the products, the lack of possibility, the contracts they have entered into.''

``In other words, their corporate model was not working,'' Shelby said.

Senator Bob Corker, a Tennessee Republican, told reporters he was ``very skeptical'' about the aid package and that it may be better for the companies to reorganize in bankruptcy.

Domestic automakers and suppliers would be eligible to apply for loans as long as they have been manufacturing in the U.S. for 25 years under the House bill. Applicants would be required to show how the loan would ``ensure the long-term financial posture'' of the company and also how it would help produce energy-efficient vehicles, according to the Senate bill.

Senate Democrats' Plan

The legislation would push the aid to automakers within a month and Treasury must accept applications within three days after the law is enacted, under the Senate bill. The loans would carry 5 percent interest for the first five years and 9 percent after that, under the House and Senate bills. No stock dividends may be paid during the duration of the loan under both bills.

The compensation limits for the highest-paid executives includes restrictions on bonuses and golden parachutes during the term of the loan. The legislation also requires government oversight, including reports by the Treasury secretary to Congress about how the money is being used.

The loans will ``sustain the auto industry through the current economic crisis,'' Senator Carl Levin, a Michigan Democrat who drafted the Senate bill, said in a statement. ``While there are differences in how to achieve that goal, there is no disagreement'' among legislative leaders on whether the aid is necessary, he said.

Senator Bill Nelson, a Florida Democrat, said on the Senate floor he supports the aid with conditions, including an increase in auto fuel efficiency and limits in executive pay. ``The current senior management should be replaced,'' he added.

`I Don't Know'

Senator Arlen Specter, a Pennsylvania Republican, said he would consider auto aid if there is a comprehensive analysis of the industry's financial situation that shows no preferable alternative. When asked by a reporter whether auto aid has the votes in the Senate to pass, he said, ``I don't know.''

Senator Kit Bond of Missouri joined fellow Republican George Voinovich of Ohio in saying he supports the aid.

``We have to act in unique times of crisis when millions of workers are in danger of losing their jobs,'' Bond said on the Senate floor. ``I will not turn my back on the hundreds of thousands of Missouri jobs. Now is the time to act.''

To contact the reporter on this story: John Hughes in Washington at Jhughes5@bloomberg.net.

Last Updated: November 18, 2008 07:51 EST