White House works on auto rescue plan

Source: Agencies  |   2008-12-17  |     NEWSPAPER EDITION

DETROIT auto makers, teetering on the brink of collapse, are receiving strong signals from the White House that short-term help is on the way while a key senator who is an ally of the automotive industry says the relief package could reach US$15 billion for GM and Chrysler.

President George W. Bush said a bankruptcy in the United States' auto industry would hurt the economy while the country deals with the recession. General Motors Corp and Chrysler LLC have said they could run out of cash within weeks without support from the government.

"An abrupt bankruptcy for autos could be devastating for the economy," Bush told reporters on Monday aboard Air Force One during a trip to Iraq and Afghanistan. He said they were "now in the process of working with the stakeholders on a way forward."

In Detroit, Democratic Senator Carl Levin of Michigan said he expects GM to get US$8 billion and Chrysler to get US$7 billion from the Bush administration.

Bush would not give a precise timetable but said, "This will not be a long process because of the economic fragility of the autos."

The Treasury Department has held discussions with GM and Chrysler and reviewed financial data from the car makers. It said on Monday that no decision had been made on what type of support it may provide.

The administration, following the defeat of a US$14-billion bailout package in the Senate last week, is weighing several options. They include using money from the US$700 billion bailout fund to provide loans to the car makers or using money from the fund as collateral for emergency loans the auto makers could get from the Federal Reserve.

Bush reiterated that tapping the financial bailout fund remains an option for the administration.