Bailout for Automakers, If Approved, Likely to Come With Fuel-Economy Strings

Bailout for Automakers, If Approved, Likely to Come With Fuel-Economy Strings

If Congress extends the Wall Street bailout to include U.S. automakers, any financial aid to the battered industry will likely be accompanied by requirements for increased fuel economy.

House Speaker Nancy Pelosi hinted at potential fuel-efficiency conditions Tuesday when she announced plans to craft legislation to use a portion of the $700 billion bailout package to aid the cash-strapped American auto industry.

"It is essential for the domestic automobile manufacturing industry to re-emerge as a global, competitive leader in fuel efficiency," the California Democrat said in a statement emailed to reporters. "For the automobile industry to be truly viable, it must continue to move in this direction."

Pelosi's comments echoed those made by President-elect Barack Obama in recent days.

But Treasury Secretary Henry Paulson said today that while autos is a "critical industry in this country," the government's $700 billion financial rescue program wasn't designed to help automakers.

Asked about Democratic congressional leaders' plan to rush financial aid to the industry, Paulson cautioned that "any solution has got to be leading to long-term viability" for auto companies.

He said Congress could try to make funding more available to the auto industry as part of a $25 billion loan program approved in September to develop fuel-efficient vehicles.

Scott Doggett:  is an AutoObserver.com Associate Editor.