Nov. 11 (Bloomberg) -- Barack Obama's meeting with President George W. Bush fueled debate in Washington over whether the government should help the ailing U.S. automobile industry.

Obama, speaking with Bush at yesterday's White House meeting, talked about the urgency for aid to U.S. automakers such as General Motors Corp. and Ford Motor Co. and the need for a second economic stimulus package to help financially strapped workers, according to aides to the president-elect.

House Speaker Nancy Pelosi called today for congressional action, saying failure by one or more of the big U.S. automakers would have a ``devastating impact'' on the U.S. economy. Assistance must be conditioned on ``rigorous independent oversight'' of carmakers and restrictions on executive compensation, she said in a statement.

Obama has called for Congress to approve legislation this month mandating the economic relief. He has said if lawmakers fail to do so, a stimulus bill will be his top priority when he takes office Jan. 20.

``The longer we wait, the harder it is to recover,'' Eugene Ludwig, a former U.S. comptroller of the currency and an Obama campaign adviser said today in an interview. ``It's sort of like giving a heart-attack patient a direct shot of adrenaline. We need it and the sooner the better.''

Figuring out how to keep the U.S. auto industry afloat if action isn't taken before the end of the year is one of the more pressing economic issues Obama will face.

Automaker Losses

General Motors Corp., the biggest U.S. automaker, reported a $4.2 billion third-quarter operating loss last week and warned it may run short of operating cash by the end of June. GM dropped 44 cents today to $2.92, and has fallen more than 90 percent from its 52-week high. Ford Motor Co. reported a $2.98 billion loss for the quarter. Ford fell 13 cents to $1.80, down almost 80 percent from the 52-week high.

Pelosi and Senate Majority Leader Harry Reid and members of Michigan's congressional delegation want Treasury Secretary Henry Paulson to use part of the $700 billion financial rescue passed last month to aid automakers. Pelosi didn't specify how much aid she supports, but said it should come from the rescue package.

White House spokeswoman Dana Perino said additional congressional authorization would be needed to help the auto industry.

Limits on Authority

``We have gone as far as we can under the authority Congress has given us,'' Perino said of the rescue measure. ``We are willing to listen to them if they can figure out a way to give us more authority to accelerate loans to viable companies.''

Democratic Senator Carl Levin of Michigan said in an interview yesterday that, if the Treasury Department can't be persuaded to act under existing law, Congress may include automaker assistance in an economic stimulus package during a so-called lame-duck session later this month.

``If they don't agree that the current language is flexible enough,'' Levin said, ``we should try an amendment during the lame-duck session and attach it to the stimulus package. If the stimulus package looks like it would be vetoed, then we would have to get this done separately.''

Both the Bush and Obama camps dismissed a New York Times report that the president had suggested in yesterday's meeting that he might support auto-industry help and the broader economic-stimulus package if Obama and congressional Democrats dropped their opposition to a free-trade agreement with Colombia.

Colombia Trade

Bush ``did talk about the merits of free trade,'' Perino told reporters traveling with Bush to New York today. ``In no way did President Bush suggest there is a quid pro quo.''

``There was no quid pro quo in the conversation,'' John Podesta, who is helping lead Obama's transition team, told reporters in Washington later in the day. ``The president didn't try to link Colombia to the question of an economic recovery package going forward.''

Podesta added that he spoke with Bush's chief of staff, Josh Bolten, this morning and ``cleared up'' the fallout from the news reports.

Pelosi, meanwhile, rejected any linkage between automaker aid and the Colombia accord.

``The speaker has said that our first responsibility is to provide immediate assistance to the millions of Americans who are suffering in today's economy,'' said Nadeam Elshami, a Pelosi spokesman. ``The Colombia free-trade agreement should be considered on its own merits.''

Stimulus Measures

Democratic leaders in Congress are considering two stimulus measures, one during their session this month and another after Obama takes office and the next Congress, with a bigger Democratic majority, is sworn in.

Obama has endorsed both steps, though Obama spokesman Robert Gibbs played down the prospects of enacting legislation before the end of this year.

During his four-hour visit to Washington yesterday, Obama signaled he was in no rush to assume responsibility for dealing with the financial crisis. Obama spokeswoman Jen Psaki said he won't attend the international summit on the global economic crisis that Bush has called Nov. 14-15 in Washington.

Speaking on a phone in front of reporters aboard his plane, Obama was overheard saying he won't be ``spending too much time in Washington over the next several weeks.''

To contact the reporters on this story: Hans Nichols in Washington at hnichols2@bloomberg.netKim Chipman in Chicago at kchipman@bloomberg.net

Last Updated: November 11, 2008 16:33 EST