Print
E-mail
Bush Keeps Auto Bailout Hopes Alive
By Joe Murray, The Bulletin
As the Motor City stands prepared to grind to a halt, President George W. Bush has kept bailout hopes alive. He signaled he might use a portion of the $700-billion bailout package, passed to help the nation’s ailing financial institutions, to keep the Big Three automakers out of bankruptcy.
“An abrupt bankruptcy for autos could be devastating for the economy,” Mr. Bush told reporters while traveling aboard Air Force One on the way to Afghanistan. “We’re now in the process of working with the stakeholders on a way forward. We’re not quite ready to announce that yet.”
When asked specifically if he would tap into the unpopular $700-billion bailout program, known as Troubled Asset Recovery Program (TARP), to keep the Big Three afloat, Mr. Bush responded, “I signaled that that’s a possibility.”
Mr. Bush’s announcement marked a change of heart with regard to bailing out Detroit. When bailout talks first began, the Bush administration rejected congressional requests to divert a portion of the $700-bailout package to automakers. He had argued Congress should remove environmental restrictions on the $25-billion package, passed to help the Big Three meet tougher fuel efficiency rules.
In mid-November, White House spokeswoman Dana Perino told reporters the $700-billion rescue program “was never intended by Congress to assist automakers or other sectors of the economy. It was solely intended to deal with what is an ongoing credit crisis in our financial sector.”
But after the House passed a $14 billion loan for the Big Three to prevent bankruptcy, Republicans, despite requests from the White House, blocked the measure in the Senate. Under the bill, backed by the White House, a car czar, appointed by President Bush, would have ensured the Big Three would make changes necessary to maintain their long-term viability.
The deal passed by the House last week would have provided loans to the Big Three to help them survive through March 31, 2009. Chrysler and General Motors each claim they will run out of cash in early 2009, while Ford has said it has enough cash to survive 2009.
Senate Republicans remained unsupportive and wanted the Big Three to reduce the wages they pay to U.S. workers before signing off on the deal. The legislative defeat left the Big Three’s financial well being in limbo and compelled Mr. Bush to consider using TARP funds.
“These companies are burning through cash at an incredible rate,” U.S. Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, told reporters while attending a conference in Dublin, Ireland.
Mr. Dodd said the government could use TARP to provide loans to the Big Three and urged the White House to act quickly.
“What the loans do is to allow them to survive basically into the first quarter, particularly in the case of GM and to some degree Chrysler LLC as well,” Mr. Dodd said, adding, “Ford is in fairly good shape in the short term.”
Some critics cautioned the Big Three should be careful of what they ask for.
“I am afraid the American auto industry will soon learn that having billions rain down from Washington will not be the blessing one might expect,” said U.S. Rep. Ron Paul, R-Texas.
“The government, after it subsidizes an industry, tends to become a very demanding benefactor. Politicians may not have any real idea about how to build a car, run a bank, educate a child, heal the sick or build a road, but they are quite adept at using carrots and sticks to manipulate and threaten those who do.”
The U.S. Department of the Treasury, which is responsible for the distribution of TARP funds, said Monday it was still studying the possibility of using a portion of the $700 billion to aid Detroit.
“We continue to assess and review the information we have received from the automakers, and we are providing regular briefings to the White House on our thinking,” Treasury spokeswoman Brookly McLaughlin said. “No decisions have been made.”
But if aid is going to make it to Detroit, the White House will have to act fast as only $15 billion remains available from the first tranche of $350 billion. And should the aid needs become great enough to trigger the request for more TARP funds, House Speaker Nancy Pelosi, D-Calif., said she would not release the funds until there was additional legislation requiring the Bush administration to help homeowners in foreclosure.
Joe Murray can be reached at jmurray@thebulletin.us.
“An abrupt bankruptcy for autos could be devastating for the economy,” Mr. Bush told reporters while traveling aboard Air Force One on the way to Afghanistan. “We’re now in the process of working with the stakeholders on a way forward. We’re not quite ready to announce that yet.”
When asked specifically if he would tap into the unpopular $700-billion bailout program, known as Troubled Asset Recovery Program (TARP), to keep the Big Three afloat, Mr. Bush responded, “I signaled that that’s a possibility.”
Mr. Bush’s announcement marked a change of heart with regard to bailing out Detroit. When bailout talks first began, the Bush administration rejected congressional requests to divert a portion of the $700-bailout package to automakers. He had argued Congress should remove environmental restrictions on the $25-billion package, passed to help the Big Three meet tougher fuel efficiency rules.
In mid-November, White House spokeswoman Dana Perino told reporters the $700-billion rescue program “was never intended by Congress to assist automakers or other sectors of the economy. It was solely intended to deal with what is an ongoing credit crisis in our financial sector.”
But after the House passed a $14 billion loan for the Big Three to prevent bankruptcy, Republicans, despite requests from the White House, blocked the measure in the Senate. Under the bill, backed by the White House, a car czar, appointed by President Bush, would have ensured the Big Three would make changes necessary to maintain their long-term viability.
The deal passed by the House last week would have provided loans to the Big Three to help them survive through March 31, 2009. Chrysler and General Motors each claim they will run out of cash in early 2009, while Ford has said it has enough cash to survive 2009.
Senate Republicans remained unsupportive and wanted the Big Three to reduce the wages they pay to U.S. workers before signing off on the deal. The legislative defeat left the Big Three’s financial well being in limbo and compelled Mr. Bush to consider using TARP funds.
“These companies are burning through cash at an incredible rate,” U.S. Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, told reporters while attending a conference in Dublin, Ireland.
Mr. Dodd said the government could use TARP to provide loans to the Big Three and urged the White House to act quickly.
“What the loans do is to allow them to survive basically into the first quarter, particularly in the case of GM and to some degree Chrysler LLC as well,” Mr. Dodd said, adding, “Ford is in fairly good shape in the short term.”
Some critics cautioned the Big Three should be careful of what they ask for.
“I am afraid the American auto industry will soon learn that having billions rain down from Washington will not be the blessing one might expect,” said U.S. Rep. Ron Paul, R-Texas.
“The government, after it subsidizes an industry, tends to become a very demanding benefactor. Politicians may not have any real idea about how to build a car, run a bank, educate a child, heal the sick or build a road, but they are quite adept at using carrots and sticks to manipulate and threaten those who do.”
The U.S. Department of the Treasury, which is responsible for the distribution of TARP funds, said Monday it was still studying the possibility of using a portion of the $700 billion to aid Detroit.
“We continue to assess and review the information we have received from the automakers, and we are providing regular briefings to the White House on our thinking,” Treasury spokeswoman Brookly McLaughlin said. “No decisions have been made.”
But if aid is going to make it to Detroit, the White House will have to act fast as only $15 billion remains available from the first tranche of $350 billion. And should the aid needs become great enough to trigger the request for more TARP funds, House Speaker Nancy Pelosi, D-Calif., said she would not release the funds until there was additional legislation requiring the Bush administration to help homeowners in foreclosure.
Joe Murray can be reached at jmurray@thebulletin.us.
 |
||
| Lawsuit Seeks To Keep Bailout Funds From AIG |
Reader Comments
The following are comments from the readers. In no way do they represent the view of thebulletin.us.
You must register with a valid email to post comments. Only your Member ID will be posted with the comments.
Registered users sign in here: |
Become a Registered User |
