UPDATE 3-Auto bailout prospects fade; last ditch effort made

(Recasts, adds Democratic bill blocked by Republicans)

By John Crawley and Kevin Drawbaugh

WASHINGTON, Nov 19 (Reuters) - Prospects for a Congressional bailout of the U.S. auto industry faded further on Wednesday with little expectation that Democratic leaders would support a compromise in the works, with little time left for action.

The last ditch effort to extend $25 billion in aid to General Motors Corp, Ford Motor Co and Chrysler LLC hinged on negotiations that are supported by Republicans and the "lame-duck" White House.

"I won't say it's completely over. I'm still having conversations with people. But it doesn't look good," Sen. Robert Bennett, a Utah Republican, said of chances lawmakers would strike a deal that could pass.

Senate Banking Committee Chairman Christopher Dodd, a Democrat, said chances of a compromise bill emerging were "remote."

Congress has at most two days remaining in its post-election session. Without a deal in that time, automakers will likely have to wait until the new Congress and the Obama administration are in place in January.

Automakers facing a rapidly worsening liquidity crunch are urgently seeking help now to avert what industry executives this week said at congressional hearings soon could be the failure of one or more of the Big Three U.S. automakers.

"We don't like being here asking for this," GM Chief Executive Rick Wagoner told the House of Representatives Financial Services Committee on Wednesday.

"So at this point, without injections of liquidity ..., probably some portion of the domestic industry will not survive," Wagoner said.

With a Democratic-sponsored $25 billion bailout proposal off table in the Senate, the emphasis shifted to a compromise package based on a strategy Democratic leaders have already dismissed as unacceptable.

But Minority Leader Mitch McConnell said in remarks on the Senate floor that the compromise "is the only proposal being considered" that has any chance of becoming law now.

The approach spearheaded by Republicans Christopher Bond of Missouri and George Voinovich of Ohio would, according to McConnell and other lawmakers, amend extend $25 billion in loans approved in September for helping Detroit retool factories and make more fuel-efficient cars.

A number of strings attached to the retooling money would have to be cut or reworked to make it available immediately for operational and other pressing needs.

"We've made great progress. We're down to wording challenges," Bond said in remarks on the Senate floor Wednesday night.

Bond proposed the Senate consider the measure on Thursday, but Majority Leader Harry Reid objected on grounds no one had yet seen the bill.

He promised to try to move forward on any compromise despite the tangled politics engulfing the bailout and the evaporating time for action.

"No matter how hard we work no matter how hard we try, the House of Representatives is going home tomorrow. They're leaving" for the year, Reid said. "I understand the importance of this but I would hope that in addition to understanding the importance of this we have to face reality."

Due to weak support and Republican objections, Democrats abandoned plans for a procedural vote on a proposal backed by Reid to tap money from the U.S. Treasury Department's financial services rescue fund to help Detroit automakers.

With a razor thin majority, Senate Democrats need some Republican support to pass legislation.

Details of the evolving compromise were kept under wraps, but Carl Levin, a Michigan Democrat and chief proponent of bailout efforts in the Senate, told reporters the common goal was still $25 billion.

Other supporters also said that taxpayer protections and other conditions limiting executive pay would be included.

"It would be unthinkable for Congress not to be able to reach a conclusion when the leadership of the Congress, the president and president-elect all say they support bridge loans," Levin said.

Democratic Rep. Barney Frank, chairman of the House Financial Services Committee and champion of a bailout plan similar to the one derailed in the Senate, said amending the retooling legislation, as he understood it, would meet resistance in the House.

"It would be sending the wrong signal to rescind the environmental restrictions," Frank said of core provisions in the retooling bill aimed at helping Detroit meet tougher new fuel efficiency standards. (Additional reporting by Matt Spetalnick, Thomas Ferraro, John Poirier, Donna Smith and Rick Cowan; editing by Gerald E. McCormick, Matthew Lewis, Richard Chang)