Fred Harteis News Articles - President Bush announced $13.4 billion in emergency loans on Friday to prevent the collapse of General Motors and Chrysler, and said another $4 billion would be available for the hobbled automakers in February. The entire bailout is conditioned on the companies undertaking sweeping reorganizations to show that they can return to profitability.
The loans, as G.M. and Chrysler teeter on the brink of insolvency, essentially throw the companies a lifeline from the taxpayers that will keep them afloat until March 31. At that point, the Obama administration will determine if the automakers are meeting the conditions of the loans and will continue to receive government aid or must repay the loans and face bankruptcy.
The money to aid the automakers will come from the Treasury’s $700 billion financial stabilization fund. Shortly after Mr. Bush’s announcement, the Treasury secretary, Henry M. Paulson Jr., who will oversee the aid to the auto industry, said Congress would need to release the second $350 billion for that program in short order.
By law, once Mr. Paulson makes a formal request, the money is released unless Congress rejects the request within 15 days and denies the additional money. It was unclear when that request would be sent or if lawmakers, who have left Washington for the holidays, would return to debate it. The administration’s handling of the program has come under sharp criticism and several lawmakers in both parties have suggested they would oppose the release of more money.
Mr. Bush made his announcement a week after Senate Republicans blocked an automaker bailout that had been negotiated by the White House and Congressional Democrats. The loan package announced by the president includes requirements that are roughly identical to those in that bill, which was approved by the House.
Mr. Bush, in a televised speech before the opening of the markets, said that under other circumstances he would have let the companies fail, a consequence of their bad business decisions. But given the recession, he said the government had no choice but to step in.
“These are not ordinary circumstances,” Mr. Bush said. “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.”
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Source; Nytimes.com
About Fred Harteis: Fred Harteis leads Harteis International. Fred Harteis has a background in agriculture and has created many successful business ventures.
