WASHINGTON - TREASURY Secretary Henry Paulson called autos a 'critical industry' on Wednesday but said a US$700 billion (S$1 trillion) financial rescue programme wasn't designed for them. The White House was non-commital, but said it was open to new ideas.

Asked about Democratic a congressional leadership plan to rush financial aid to the industry, Mr 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 US$25 billion (S$37.74 billion) loan programme approved in September to develop fuel-efficient vehicles.

At the White House, press secretary Dana Perino said the administration is not responsible for the automakers' woes but understands the importance of the industry.

But officials there are reluctant to make any proposals for new aid, suggesting the car companies hold much of the responsibility for their own survival.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are pushing for something more sweeping to help the industry, which is suffering under the weight of poor sales, tight credit and a sputtering economy.

Ms Pelosi said on Tuesday she was confident that lawmakers meeting next week in a lameduck session would consider 'emergency and limited financial assistance' for the auto industry under the US$700 billion bailout measure that passed Congress in October. She urged the outgoing Bush administration to support a compromise.

'In order to prevent the failure of one or more of the major American automobile manufacturers ... Congress and the Bush administration must take immediate action,' said Ms Pelosi, a Democrat from California.

Mr Reid, a Nevada Democrat, said that Democrats were 'determined to pass legislation that will save the jobs of millions' as part of a postelection session.

'This will only get done if President Bush and Senate Republicans work with us in a bipartisan fashion, and I am confident they will do what is right for our economy,' he said.

The Bush administration has concluded that the bailout bill that passed earlier does not allow loans to the auto industry.

White House spokesman Dana Perino said the companies had made business decisions 'over the years that have led to this situation, but we have gone as far as we can with the authority Congress has given in order to help industries.' But he said the White House was open to helping the auto industry.

Lawmakers are expected to take up the issue when they return to the Capitol for a postelection session beginning next week.

Democratic leaders will need to convince some skeptical lawmakers who question whether a bailout would cause changes in the auto industry or simply lead to more handout requests from other industries.

'Once we cross the divide from financial institutions to individual corporations, truly, where would you draw the line?' asked Senator Jeff Sessions, R-Alabama.

Michigan Governor Jennifer Granholm said on Wednesday that the crisis in the auto industry is urgent, arguing that 'the national economy rests on this.'

'This industry supports one in 10 jobs in the country,' Granholm said on Wednesday on CBS' Early Show.

'If this industry is allowed to fail, there would be a ripple effect throughout the nation.'

She added: 'This government decided that it was going to step in and throw US$700 billion at the financial sector. We're just asking for a fraction of that.'

Ms Pelosi said any assistance to the industry should include limits on executive compensation, rigorous government review authority and other taxpayer protections.

Her request for legislation came less than a week after General Motors and Ford Motor posted bleak third-quarter earnings reports.

GM, the nation's largest automaker, posted a US$2.5 billion quarterly loss on Friday and warned that it may run out of money by the end of the year without government aid.

'We're in a situation where there's a great unknown about what will happen,' said Senator Debbie Stabenow, D-Michigan.

'And a great concern that at least one of the companies will find themselves in a situation where they cannot make it until Jan 20,' when President-elect Obama is inaugurated.

GM spokesman Greg Martin said the automaker was 'ready to work with Congress and the administration to secure the immediate support we need to bridge the current economic crisis.'

Mr Obama has urged the Bush administration to do more to help the industry and aides said he raised the issue with President Bush on Monday in an Oval Office meeting.

Officials familiar with the conversation said the president replied he was open to the idea.

Congress approved legislation in late September to provide US$25 billion in loans to domestic automakers and suppliers to upgrade factories to build more fuel-efficient vehicles.

But the funding has stalled and supporters of the industry say it will not be sufficient to help the companies with their immediate financial problems.

Executives with GM, Ford and Chrysler LLC and the president of the United Auto Workers union pressed Ms Pelosi and Mr Reid to provide an immediate US$25 billion loan to keep the companies operating and a separate US$25 billion to help cover future health care obligations for retirees and their dependents.

Ms Pelosi's statement did not specify the size of the aid package. She has tasked Representative Barney Frank, D-Massachusetts, chairman of the House Financial Services Committee, to draft legislation, and a companion effort is under way in the Senate.

Senator Carl Levin, D-Michigan, said lawmakers from his state are crafting legislation that would allow the auto industry to receive US$25 billion in loans under the US$700 billion bailout programme. -- AP