The Big Three’s chief executive officers held a rare Capitol Hill meeting Wednesday with House Speaker Nancy Pelosi (D-Calif.) and other Democratic leaders to ask for $25 billion in government loans for the auto industry.

Detroit wants the loans, authorized by Congress in last year’s energy bill but not yet appropriated, to revamp plants in Michigan and other states so that they can produce more hybrid cars and other fuel-efficient vehicles.

The Big Three need to start selling more hybrids, not only to compete with foreign competitors, but to meet tougher fuel-efficiency standards included in the 2007 energy bill. In a letter to Pelosi, the three CEOs said the cost of complying with the new standards would be more than $100 billion over the next decade.

The letter also said high gas prices, the housing crisis and other economic ills had cut into Detroit’s sales, leading to the worst economy for struggling automakers in decades.

“These factors have severely impacted our financial situation and have led to the most difficult business environment for our domestic auto industry in over 30 years,” said the letter, signed by Ford CEO Alan Mulally, General Motors (GM) CEO Richard Wagoner and Chrysler CEO Robert Nardelli.

After the meeting, Mulally said it had been a great day at the Capitol. “We’re very pleased with the bipartisan support we’ve received,” he said.

Nardelli said sessions on the Hill “went extremely well,” adding that “time is critically important.”
Momentum for the automakers appears to be growing.

House Republican Whip Roy Blunt (Mo.) and Conference Chairman Adam Putnam (Fla.) both struck positive notes on the loans on Wednesday, and both presidential candidates have offered support. The White House, however, has been noncommittal.

The Big Three cannot secure the loans without an appropriation from Congress to cover the risk of the companies defaulting on the loans. That will cost $7.5 billion, as the Congressional Budget Office has scored the program using an estimated 30 percent default rate.

The lobbying push by automakers comes amid a tumultuous week on Wall Street in which the government effectively nationalized one of the nation’s largest insurers, the American International Group (AIG), while allowing investment bank Lehman Brothers to go into bankruptcy.

Ford, GM and Chrysler, as a result, are fighting the perception that they are asking for a bailout. They argue Congress already authorized the loans in last year’s energy bill, and that providing the funding is in America’s national interest since it would help wean the U.S. off foreign sources of oil, since less foreign oil would be needed if more Americans could drive more fuel-efficient vehicles.

Asked about Detroit’s request, Mulally said, “I would characterize it as an enabler.”

“Our request of Congress is different than what it is being compared to by some observers,” said Bruce Andrews, a lobbyist for Ford, who noted the loans would be repaid with interest, and are not cash grants.