President Bush has approved a $17.4 billion auto bailout, with $13.4 billion in emergency loans to prevent the collapse of GM and Chrysler and another $4 billion to be handed out in February.
The loans are meant to be a lifeline — and will keep the companies afloat until March 31st. At that point, says the NYT, 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 terms of the bailout are almost identical to the plan rejected by Republicans in the Senate a week ago.
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.”
The money for the loans will come from the $700 billion bailout that was previously approved by Congress.
Bush Approves $17.4 Billion Auto Bailout [NYT]
(Photo: Doug Mills/NYT)