US President George W. Bush has approved an emergency bailout of the country's auto industry, offering over 17 billion US dollars in rescue loans in exchange for tough concessions from the deeply troubled carmakers and their workers.
Bush further elaborated upon the actual use of the rescue package to its auto industry.
"First, they will give automakers three months to put in place plans to restructure into viable companies, which we believe they are capable of doing. Second, if restructuring cannot be accomplished outside of bankruptcy, the loans will provide time for companies to make the legal and financial preparations necessary for an orderly Chapter 11 process…"
The President added that allowing the US auto industry to collapse in the middle of what is already a severe recession is not a responsible course of action.
According to the new move, the US 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.(www.hXen.com)
One official said some 13 billion of the money would be available this month and next, 9 billion for General Motors Corporation and 4 billion for Chrysler, who have both claimed that they soon might be unable to pay their bills without federal help.
Under terms of the loan, GM and Chrysler must provide the government with stock warrants giving it the option to buy GM and Chrysler stock at a specific price.
President-elect Barack Obama, who takes office a month from Saturday, also praised the White House move.
