Detroit (WWJ/CBS) -- After weeks of stalled deals and rumors of industry collapse, the White House finally stepped in to provide struggling automakers $17.4 billion in financial relief.
The Big Three will receive $13.4 billion in short-term financing from the larger financial bailout money that Congress passed to rescue Wall Street firms. Another $4 billion would become available for the carmakers in February.
Speaking Friday morning, President Bush said he's offering the loans to the auto industry because letting them collapse is ``not a responsible course of action.'' Listen:
He says the rescue plan will require ``meaningful concessions'' from the auto companies and others, including labor unions and suppliers. The companies, he says, ``must understand what is at stake, and make the hard decisions necessary to reform.'' View video
Bush said Friday he ordinarily would let the companies go bankrupt, concluding it's the ``price that failed companies must pay.'' But, he says, ``These are not ordinary circumstances.'' He says letting the industry collapse, amid a financial crisis and a recession, would be irresponsible.
He says there's ``too great a risk'' that a bankruptcy filing would lead to a ``disorderly liquidation of American auto companies'' and send the economy into a ``deeper and longer recession. Read full text of Bush's statement.
The auto companies have until the end of March to become financially viable. If they don't, the loans will be called in and all funds must be returned. Click here to read a fact sheet detailing the package.
Attempts to pass a bailout bill stalled in the Senate earlier this month after making it through the House.
On Thursday, the Bush administration had indicated it would consider an "orderly" bankruptcy to keep the automakers from failing.
But the Big Three automakers said repeated their insistence that bankruptcy wasn't the answer, as did an official of the United Auto Workers who called the idea unworkable and even dangerous. The car companies argue that no one would buy a vehicle from a bankrupt company for fear that the company might not be around to honor warranties or maintain a supply of spare parts.
The National Automobile Dealers Association also spoke out against bankruptcy "in any way shape or form, orderly or disorderly, prepackaged or unpackaged, managed or unmanaged," said spokesman Bailey Wood.
While they wait for a rescue package, the automakers have announced extended holiday shutdowns. Chrysler is closing all 30 of its North American manufacturing plants for four weeks because of slumping sales; Ford will shut 10 North American assembly plants for an extra week in January, and General Motors will temporarily close 20 factories - many for the entire month of January - to cut vehicle production.
Automakers and others were reacting publicly to the deal Friday. Click here.
Health Care Reform Debate 11/21
Michigan Senator Debbie Stabenow addresses the floor on the first vote that will take place for the health reform bill.
Health Care Debate 11/21
Michigan Senator Carl Levin addresses the Senate prior to a vote on the health care reform bill.
WWJ Newsradio 950 is Detroit's only all-news radio station and is the leader in Detroit radio news. Listen online to WWJ-AM 950 for live, local Detroit news, up-to-the-minute Detroit traffic, Detroit sports, Detroit business and Detroit community information. WWJ Newsradio 950 is an award winning radio station and you can listen online and podcast on demand Detroit news, Detroit Construction Alerts, Detroit School Closings, Winter Survival Guide and learn more about our Business Breakfasts. www.wwj.com.
E-Mail Story
Print Story
View video
