President Bush has just announced emergency federal loans will be issued to prevent the collapse of General Motors and Chrysler LLC. The announcement came during a White House press conference earlier today.
"If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy," Bush said in a speech at the White House. "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 question is how we can best give it a chance to succeed."
Congress originally rejected legislation last week to provide some $14 billion in loans to the automakers. Officials stressed that in normal circumstances, they'd prefer the companies to reorganize under federal bankruptcy law- though the current economic situation has left things far from 'normal'.
Due to the crippled US Economy and credit market, customers are increasingly unable to secure financing to buy new vehicles. As a result, automakers from around the world are reporting huge sales decreases and cutbacks. Sales levels have dropped recently to levels not seen since the early 80's.
Two weeks ago, America's automakers told Congress that they'd need at least $34 billion dollars in loans to help weather the economic turndown. Ford says they don't face the same crisis as GM and Chrysler, but that they'd like access to a federal line of credit in case conditions worsen.
At the moment, GM and Chrysler will benefit from $17.4 billion dollars worth of low-interest government loans, providing that they're able to prove they can be profitable soon.
photo:Chrysler
"If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy," Bush said in a speech at the White House. "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 question is how we can best give it a chance to succeed."
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Congress originally rejected legislation last week to provide some $14 billion in loans to the automakers. Officials stressed that in normal circumstances, they'd prefer the companies to reorganize under federal bankruptcy law- though the current economic situation has left things far from 'normal'.
Due to the crippled US Economy and credit market, customers are increasingly unable to secure financing to buy new vehicles. As a result, automakers from around the world are reporting huge sales decreases and cutbacks. Sales levels have dropped recently to levels not seen since the early 80's.
Two weeks ago, America's automakers told Congress that they'd need at least $34 billion dollars in loans to help weather the economic turndown. Ford says they don't face the same crisis as GM and Chrysler, but that they'd like access to a federal line of credit in case conditions worsen.
At the moment, GM and Chrysler will benefit from $17.4 billion dollars worth of low-interest government loans, providing that they're able to prove they can be profitable soon.
photo:Chrysler