The US Senate fails to pass a $14bn bail-out package for the car industry, after talks on a compromise measure collapse.

At 1:15pm (Singapore time GMT +8)
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Senate negotiators failed onThursday night to reach a compromise deal to bail out U.S.automakers, Senate Majority Leader Harry Reid said. "There is too much difference" between negotiators to reach an agreement,he said. Reid said the chamber would attempt to proceed with aDemocratic-sponsored plan, but predicted it would not pass.

The Senate rejected the bailout 52-35 on a procedural vote -- well short of the 60 required -- after the talks fell apart.

The collapse of negotiations could possibly doom General Motors to a bankruptcy and closure in the coming weeks, with Chrysler LLC potentially following close behind. While Ford Motor has more cash on hand to avoid an immediate crisis, its production could be disrupted by problems in the supplier base, as could the production of overseas automakers with U.S. plants such as Toyota Motor and Honda Motor.

However, the Big Three could still wind up getting government funding. Bush officials warned wavering GOP senators earlier Thursday that if they didn't support the legislation, the White House will likely be forced to tap the Wall Street bailout to lend them money.

The stunning disintegration was eerily reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent the Dow tumbling and lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed and was signed by Bush.