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WASHINGTON — The long-term fate of the auto industry rests with Barack Obama now that President George W. Bush has given car companies $17.4 billion in emergency rescue loans.
Simply letting the Big Three collapse was not an option amid a recession, housing slump and financial credit crunch, Bush said in announcing the short-term loans and demanding tough concessions from the automakers and their employees.
"By giving the auto companies a chance to restructure, we will shield the American people from a harsh economic blow at a vulnerable time," the president said in his Saturday radio address. "And we will give American workers an opportunity to show the world once again that they can meet challenges with ingenuity and determination, and emerge stronger than before."
The Detroit companies pledged to rebuild their once-mighty industry, though they acknowledged it would be tough to fight their way back from the brink of bankruptcy. If the carmakers fail to prove viability — a positive cash flow and ability to make good on the loans — by March 31, they will be required to repay the government loans.
That's something they would find all but impossible to do.
Bush said the loans will give automakers three months to institute plans to restructure into viable companies "which we believe they are capable of doing." He said if restructuring cannot be done outside bankruptcy, the loans will provide time for companies to make the legal and financial preparations needed for an "orderly" Chapter 11 bankruptcy.
"This restructuring will require meaningful concessions from all involved in the auto industry — management, labor unions, creditors, bondholders, dealers and suppliers," he said. "If a company fails to come up with a viable plan by March 31, it will be required to repay its federal loans. Taken together, these conditions send a clear message to everyone involved in American automakers: The time to make the hard decisions to become viable is now — or the only option will be bankruptcy."
The autoworkers union complained the deal was too harsh on its members, while Bush's fellow Republicans in Congress said it was simply bad business to bail out the industry using money from the $700 billion rescue program for financial institutions.
Obama, who takes office a month from Saturday, praised Bush's action but said the companies "must not squander this chance to reform bad management practices and begin the long-term restructuring" absolutely necessary.
Obama will be free to reopen the arrangement from the government's side if he chooses, and the head of the United Auto Workers said the union would be appealing to the new president and the strongly Democratic new Congress on that subject.
Some $13.4 billion of the rescue money will be available this month and next — $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC, which have said they could be facing bankruptcy soon without government help. GM is set to receive the remaining $4 billion in loans after more money is released from the financial rescue account. Ford Motor Co. says it doesn't need federal cash now but would be badly damaged if one or both of the other two went under.
Under terms of the loans, the government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry. Bush said the companies' workers should agree to wage and work rules that are competitive with foreign automakers by the end of next year.
And he called for elimination of a "jobs bank" program — negotiated by the UAW and the companies — under which laid-off workers can receive about 95 percent of their pay and benefits for years. This month, the UAW agreed to suspend the program.
The deal also calls for two-thirds of the automakers' debts to be converted to stock in the companies.
© 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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 | Text of Bush's statement on auto industry rescue | Associated Press | Fri Dec 19 | 0 |
 | GM, Chrysler get up to $17.4 billion in federal aid | The Detroit News | Fri Dec 19 | 0 |
| Loans give GM, Chrysler 3 months | The Detroit Free Press | Sat Dec 20 | 1 |
| President Bush: Automakers to get $17.4B -- GOPUSA | gopusa.com | Fri Dec 19 | 0 |
| Fact sheet: See the White House's terms | The Detroit Free Press | Fri Dec 19 | 0 |
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{"commentId":4501788,"authorDomain":"rdonaldsnyder"}
It's about damn time Bush did something, anything, to benefit average working Americans. What in the hell took him so long and why did he spend the last 8 years pissing on working Americans?
In the end it doesn't matter. Barack will do the right thing by working Americans and to hell with the departing GOP senators who hate the working class. Good riddance to them.
{"commentId":4501788,"threadId":"450039","contentId":"2232888","authorDomain":"rdonaldsnyder"}
#1 - Sat Dec 20, 2008 4:32 AM EST{"commentId":4501797,"authorDomain":"Deme"}
{"commentId":4503153,"authorDomain":"wittyandfiesty"}
The problem is..."We can't agree to disagree" on anything. I can't remember an election period that the US people have been divided, angry and nasty as we have been this time. Hatred has been promoted along with our new PE.
People bash President Bush, but he did serve 2 terms. They had every opportunity to vote someone else in. The problem is, we haven't had to many choices in the past 16 years, including the Clinton administration. Where are they at? Obama talks change, but I don't see the kind of change the American people want is what he has in store for us.
We do need to come together as a country..regardless of how we feel. I am a republican, but raised a Democrat...I base my support not on my party but on the qualifications of the people who are running. So crssoing the isle, as many has done should never be a fight. What matters is the Union of People, the good of the President & His Cabinet, to include every aspect of the White House Staff. Not just the president himself. Less critisium and more people writing thier represetatives and expressing their anger, happiness or concerns. Stop jaw jacking and start speaking up.
"I pledge allegiance to the flag of the United States of America, and to the Republic for which it stands; one nation, under God, indivisible, with liberty and justice for all."
{"commentId":4503153,"threadId":"450039","contentId":"2232888","authorDomain":"wittyandfiesty"}
#3 - Sat Dec 20, 2008 10:14 AM EST{"commentId":4504109,"authorDomain":"tishamauro"}
The reason we can't get a better choice for candidates is because the media picks them for us. The pick the candidate that will make the best story. Obama was the "chosen one" this year. What a great story, right? The great orator, first black president, the fight against the establishment Clintons. The story is one for the history books.
The only problem with that is that "what if" (lol) the media isn't looking out for what is best for the future of our country they only want what sells. Obama was/is money for the media.
{"commentId":4504109,"threadId":"450039","contentId":"2232888","authorDomain":"tishamauro"}
{"commentId":4507046,"authorDomain":"rdonaldsnyder"}
The reason people bash Bush is that he's done everything possible to earn that bashing. For the first 6 years of his presidency he had a rubber stamp congress and shoved one piece of right wing garbage after another down our throats. Now that the Democrats are coming back in to power all of a sudden the same republicans who have been beating us over the head now throw up their arms and say we all have to "play nice" and govern from the middle in a bipartisan way. BULL! When they were in power they pissed all over any and all attempted by the Democrats to govern in bipartisan way, so screw 'em! In fact they mocked the very idea and pledged to form a permanent GOP majority so they could do whatever they pleased. Their words, not mine. They reap what they sow.
They treated us with hate for 8 years, now it's coming back on them. It's their screw up so point the finger at them! THEY are the ones who purposly devided the country as a way for them to try to take and hold power. We're going to run this government as Democrats, with Domcratic ideas and programs, the same way they ran it as republicans, except our way works. If the GOP doesn't like it, too damn bad. Eat it!
{"commentId":4507046,"threadId":"450039","contentId":"2232888","authorDomain":"rdonaldsnyder"}
- 1 vote
{"commentId":4509477,"authorDomain":"nskrenes"}
Cant trust any of them the Corporations or the Government they sleep in the same feathered bed together I'd be willing to bet they plan on taking the car production to Mexico with this money.Americans are not going to benefit in the end the little guy takes the hit and the upper Managers get rich, duke a couple of politicians to turn there heads and vote for it.The Banks should have lent the money here why use tax money?This just opened Pandora's box who's next in line?The lobbyists have access to this, now her comes the Money Train for more mismanaged business to get a hand out if we the people don't speak up the future of this country will be in more Madoff scandals Government produced.!Our currency wont be worth the paper its printed on.Laws need to be changed to impound life long earnings of the wealthy for corrupt Government and Private dealings when convicted no more transfers of money to family or friends or trusts or Church's America needs Ethics and morality to be ones wealth and stop this white collar crime by a light sentence to many peoples generations are now being affected.The Constitution need to be upheld and our Court system open to common people not just the wealthy Crooks and Thief's!!!
{"commentId":4509477,"threadId":"450039","contentId":"2232888","authorDomain":"nskrenes"}
#4 - Sat Dec 20, 2008 10:43 PM EST{"canLink":false,"threadId":"450039","isPrivate":false}
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