Bush Authorizes $13.4-Billion Plan for GM, Chrysler
President George W. Bush announced today a $13.4-billion plan to aid ailing U.S. automakers in order “shield the American people from a harsh economic blow at a vulnerable time.”
After Senate Republicans blocked the passage of a rescue package for the auto industry, the White House took money from October’s $700 billion bailout for the financial industry. Another $4 billion could be authorized in February if President-elect Barack Obama thinks it is necessary.
This news comes on the tails of Chrysler’s announcement that it will shut down all 30 of its US plants for a month over the holidays.
Ford Motor Company said today it would not require or seek a short-term loan from the government.
“We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government,” Ford president and chief executive officer Alan Mulally said in a statement.
Ford is supportive of the rescue package for its competitors in which the government would provide struggling car companies $13.4 in short-term loans so the companies could restructure.
“All of us at Ford appreciate the prudent step the administration has taken to address the near-term liquidity issues of GM and Chrysler,” Mulally said. “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.”
This move does not take bankruptcy off the table for GM and Chrysler. If there is not a major restructuring of the companies and they do not begin to adapt their car models to become more modern and environmentally friendly, they may not be able to recover on their own and the government may not be interested in bailing them out again at a later time.