WASHINGTON (Bloomberg) — General Motors Corp. rose in New York trading after House Speaker Nancy Pelosi urged Congress to pass an auto-industry bailout, embracing the premise that GM is too big to be allowed to fail.

In calling for an emergency aid plan yesterday, Pelosi rejected calls to let GM collapse and sided with the largest US automaker and its allies in trying to prevent a "devastating" domino effect that would cost millions of jobs.

"Trying to reorganise the auto industry in bankruptcy would be as close to reorganising the whole US economy as you could get," said Alan Gover, a bankruptcy lawyer with White & Case LLP in New York. "The vast supply chain involves thousands of businesses, millions of existing jobs and just as many retirees, as well as whole communities and states."

Passage of an industry bailout plan may keep GM from running out of operating cash by year's end, which it says may happen without US help. GM is the second-biggest provider of private health-care benefits and was the third-biggest advertiser in this year's first half.

"It's truly one of those companies that's too big to fail, and everybody understands that," said Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts. "If it does collapse, it could make the recession deeper and longer."

Behravesh said a GM bankruptcy could send the US jobless rate as high as 9.5 percent, up from October's 14-year high of 6.5 percent, and produce a recession as long as that of 1980-82. Ford Motor Co. and Chrysler LLC also might be at risk.

GM climbed 24 cents, or 8.4 percent, by mid-afternoon in New York Stock Exchange composite trading after yesterday's fall to a 65-year low. Ford rose 14 cents, or 7.8 percent, to $1.94.

While Pelosi, a California Democrat, didn't cite GM by name in her statement endorsing a bailout, she said an automaker collapse would have a "devastating impact on our economy."

She also didn't specify the size or the rules for the package she is seeking for the industry, whose 2008 US sales are headed toward a 17-year low. That slump is overwhelming cost-cutting efforts including elimination of 46,000 US jobs at GM since 2004, when the company last posted an annual profit.