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Auto industry gets lifeline
Conservative Republicans criticized the auto bailout, but President-elect Barack Obama called President Bush's move a "necessary step."
In a dramatic move aimed at preventing the US auto industry from imminent collapse, President Bush announce that the government will provide about 17.4 billion dollars and low interest loans to General Motors and Chrysler, bankruptcy by any of the Big Three, he said would almost guarantee the failure.
Given the current stage of the auto industry and the economy, chapter 11 is unlikely to work for American auto makers at this time.
Ford in a statement said its liquidity is adequate and didn't need the government loan, but Rick Wagoner the CEO of the General Motors said his company would access billions of loan dollars immediately and will now focus on fully implementing its restructuring plan.
People will be/ should have a lot of confidence, not only General Motors, but the US industry is on the right path, and as we execute the plans we have laid out, that the future of the industry could be extremely bright.
Well, many conservative Republicans criticize the auto bailout is throwing good money after bad, president-elect Barack Obama had a news conference in Chicago announcing his latest cabinet choices, called president Bush's move " a necessary step" for the auto industry.
“They should seize on this opportunity over the next several weeks and months to come up with a plan that's sustainable, and that means they gotta have to make some hard choices.”
In fact, the three-year loans to GM and Chrysler come with conditions, such as requiring the companies to prove by March 31st, that they can become viable, Fran leeway of equity auto industry analyst at Standard & Poor’s.
No matter what that viability plan is /is gonna take to some significant additional funding come March 31st to get these companies through 2009.
That's a prospect that Barack Obama will soon confront when he takes on the problems of the auto makers upon taking office in just one month.
John Deckers, Reuters.
