By Harry Stoffer, Automotive News
Washington, DC -- General Motors and Chrysler llc could get the first installment of $17.4 billion in federal emergency loans as soon as 29 Dec, the Bush administration says.
President Bush announced at the White House today that he decided to make the loans available to prevent the automakers' collapse and avoid more damage to a fragile economy. To do otherwise would be "irresponsible," Bush said.
He also indicated he didn't want to have President-elect Barack Obama take office next month with the industry in shambles.
Administration officials noted that automakers have tough loan conditions to meet by 31 March. The loans would be called back if GM and Chrysler cannot prove they can restructure for long-term viability.
The loan targets include a push for US workers to accept the same wages paid in transplant factories. While the targets aren't mandatory, GM and Chrysler must explain any failure to meet them.
Chrysler can tap $4 billion this month. GM would get $4 billion initially and $5.4 billion more on 16 Jan. Another $4 billion would be available to GM on 17 Feb, subject to additional congressional action.
"The American people want the auto companies to succeed, and so do I," Bush said in remarks from the White House. He said the automakers need financial aid while they restructure because a disorderly collapse could send the economy into a deeper and longer recession.
All of the funds will come from a $700 billion fund that was originally designed to rescue struggling financial institutions. The first $13.4 billion is available now. The last $4 billion depends on congressional release of the second $350 billion for the bank rescue fund.
Both GM and Chrysler have been forced to idle plants and lay off thousands of workers across North America as they try to save cash. They have warned they could face bankruptcy without federal help, as US auto sales have dropped to levels not seen since the early 1980s amid the global credit crunch.
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