The Obama administration task force is likely to recommend more aid for struggling US automakers, a senior senator said on Wednesday.
Carl Levin of Michigan said on Capitol Hill that "it is clear" more help is on the way and any assistance for General Motors Corp and Chrysler LLC would be tied to new conditions on restructuring.
The Wall Street Journal, citing interviews with task force members, reported late on Wednesday that the panel was preparing a recommendation for more help with new strings attached.
The task force has a March 31 deadline to determine whether GM and Chrysler, controlled by Cerberus Capital Management, can be competitive and worthy of up to $22 billion in additional bailout funds.
The two received $17.4 billion in taxpayer assistance in December after saying they could not survive without it. Ford Motor Co, which is also struggling financially, has not sought a bailout.
Levin said he had no specifics on any aid plan, but optimism for new loans to help GM and Chrysler rose last week when the task force approved $5 billion in aid for stressed industry suppliers.
Auto industry finance arms have also received government assistance to help spur consumer lending with auto sales plunging this year amid recession.
GM shares fell 6 per cent in regular trade on the New York Stock Exchange but rose a penny after hours to $3.
GM declined to comment on aid developments. Chrysler could not immediately be reached for comment.
It remains unclear, however, how the task force overseen by the White House and Treasury Department would tailor a new bailout package.
The group previously indicated that bankruptcy for GM and Chrysler was not its goal, although some analysts and lawmakers believe Chapter 11 would be an efficient way to restructure Detroit.
Key House lawmakers from Michigan said last week they were told by task force leaders that any plan would include separate recommendations for GM and Chrysler and that an announcement could come as early as this week.
GM has asked for more than $16 billion in aid, while Chrysler is seeking $5 billion.
The rescue extended by the Bush administration required specific concessions on wages and retiree health care costs by the United Auto Workers, and debt reduction through GM bondholders.
While the companies have made progress on UAW concessions, final agreements have not been struck. Additionally, there has been no deal at GM with bondholders on a proposal to swap a sizable portion of the $27 billion in debt they hold for equity.