Detroit automakers to get $17.4 billion in short-term financing
BY MICHAEL MCAULIFF
DAILY NEWS WASHINGTON BUREAU
Updated Friday, December 19th 2008, 12:14 PM
Free market-loving President Bush tossed a $17.4 billion lifeline to the U.S. auto industry Friday morning, handing Detroit loans from the pile of cash meant to bail out the financial sector.
Bush said letting the companies fend for themselves - or even seek bankruptcy protection - simply wouldn't work right now.
"If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers," Bush said announcing the loans for General Motors and Chrysler.
President-elect Barack Obama said Bush's action was a "necessary step to help avoid a collapse" of the American auto industry.
"The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely required to save this critical industry and the millions of American jobs that depend on it," Obama added.
A key condition of the rescue requires the companies to come up with a viable plan to restart their engines by March 31, or be forced immediately to pay the money back.
That gives them, and the Obama administration, time to chart a future course.
"In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action," Bush said. "The question is how we can best give it a chance to succeed."
General Motors is slated to receive $13.4 billion as part of the relief plan, with Chrysler getting $4 billion.
Ford passed on the short-term bailout.
"We do not face a near-term liquidity issue," Ford boss Alan Mulally said.
Mulally hailed the President for stabilizing his rivals.
"The US auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened US economy," he said.
Bush said he was left with no choice but to fork over the funds.
"Under ordinary economic circumstances, I would say this is the price that failed companies must pay, and I would not favor intervening to prevent the automakers from going out of business," Bush said.
"But these are not ordinary circumstances," he added.
Since Congress did not pass the legislation to help the car makers, a side benefit for Obama when he takes over is that he will have the flexibility to change the deal however he wants.
And Bush cast this as a bit of an early Christmas present for Obama, saying he didn't want his successor to have to face an even worse crisis than he already will when he steps into the Oval Office.
BY MICHAEL MCAULIFF
DAILY NEWS WASHINGTON BUREAU
Updated Friday, December 19th 2008, 12:14 PM
Free market-loving President Bush tossed a $17.4 billion lifeline to the U.S. auto industry Friday morning, handing Detroit loans from the pile of cash meant to bail out the financial sector.
Bush said letting the companies fend for themselves - or even seek bankruptcy protection - simply wouldn't work right now.
"If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers," Bush said announcing the loans for General Motors and Chrysler.
President-elect Barack Obama said Bush's action was a "necessary step to help avoid a collapse" of the American auto industry.
"The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely required to save this critical industry and the millions of American jobs that depend on it," Obama added.
A key condition of the rescue requires the companies to come up with a viable plan to restart their engines by March 31, or be forced immediately to pay the money back.
That gives them, and the Obama administration, time to chart a future course.
"In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action," Bush said. "The question is how we can best give it a chance to succeed."
General Motors is slated to receive $13.4 billion as part of the relief plan, with Chrysler getting $4 billion.
Ford passed on the short-term bailout.
"We do not face a near-term liquidity issue," Ford boss Alan Mulally said.
Mulally hailed the President for stabilizing his rivals.
"The US auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened US economy," he said.
Bush said he was left with no choice but to fork over the funds.
"Under ordinary economic circumstances, I would say this is the price that failed companies must pay, and I would not favor intervening to prevent the automakers from going out of business," Bush said.
"But these are not ordinary circumstances," he added.
Since Congress did not pass the legislation to help the car makers, a side benefit for Obama when he takes over is that he will have the flexibility to change the deal however he wants.
And Bush cast this as a bit of an early Christmas present for Obama, saying he didn't want his successor to have to face an even worse crisis than he already will when he steps into the Oval Office.