A bill that would provide federal government aid to Detroit automakers passed its first hurdle in the House of Representatives on Wednesday night, but failed to win approval in the Senate late on Thursday.

The House passed – 237 to 170 – a Democrat-drafted bill that would provide $14bn in government loans to automakers but observers said Republican opposition in the Senate could halt its passage into law.

The Democrats had negotiated with the Republican Bush White House for three days on the bill’s content and the size of the loan was reduced $1bn at the last minute to $14bn. Automakers had sought a total of $34bn in loans and credit lines in Congressional hearings last week.

”This legislation is about offering Detroit and America a chance to get back on track,” House Speaker Nancy Pelosi said in a speech in the House prior to the vote. ”It gets down to a question of tough love.”

Senator George Voinovich, an Ohio Republican in favour of industry aid, told Reuters yesterday that there wasn’t enough Republican support to enact the measure. Senate majority leader Harry Reid, a Nevada Democrat, said before the House vote that he wanted a quick vote though opponents could delay final action until Saturday or Sunday.

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The upper house could vote on the measure as early as today (11 December).

If it does pass, automakers who pick up a government loan will be subject to a ‘car czar’ – appointed by President George W Bush with wide-ranging powers – to dole out the cash.

The czar will have authority to force the companies into bankruptcy next spring if they fail to restructure their businesses and secure long-term viability.

He or she could also force automakers, creditors, workers, suppliers and dealers to agree on restructuring or return their emergency loans and would have authority to review – and halt – any automaker transaction of $100m-plus.

One Democrat said the czar would also have authority to prevent factory closures or production shifts to other countries.

The bill also gives the government equity stakes in the automakers, bans dividend payments to shareholders, bans ownership of corporate jets (no mention of leasing) and limits executive pay and benefits.

US taxpayers will also earn interest on their auto industry investment: 5% for the first five years and then 9%. And the government gets first dibs on any repayments ahead of other creditors.

General Motors said in a statement: “We thank the House and its leadership for their bipartisan vote to support America’s domestic automakers at this most critical time for the nation’s economy.

“The House vote brings us closer to saving jobs and to creating a more competitive US auto industry in order to maintain America’s economic vitality.

“We encourage the Senate to act soon so that we can continue at full speed on the restructuring and advanced technologies plans that will form a stronger, more viable GM.”

“Many Republicans and Democrats agree that a disorderly bankruptcy could be fatal to U.S. automakers and have devastating impacts on jobs, families and our economy,” White House spokeswoman Dana Perino said in a statement ahead of last night’s vote.

“We believe the legislation developed in recent days is an effective and responsible approach to deal with troubled automakers and ensure the necessary restructuring occurs.”

During the debate, Republicans argued that the industry should be forced to restructure before getting government help.