12 December 2008 15:46 [Source: ICIS news]
WASHINGTON (ICIS news)--President George Bush will do what is necessary to prevent the collapse of the Big Three automakers in Detroit, his spokeswoman said on Friday after the US Senate failed to reach a compromise on a carmaker bailout bill.
White House spokeswoman Dana Perino said that Bush was disappointed that Congress was unable to work out appropriate legislation to provide $14bn (€11bn) in emergency federal loans to keep the Detroit-based auto manufacturers afloat until the first quarter next year.
The automobile industry is a key end-user of a range of petrochemicals, and its extended downturn in the US especially has taken a big bite out of chemical demand.
Each vehicle contains an average of $2,440 (€1,830) worth of chemical products, according to the American Chemistry Council (ACC).
In addition, Perino said that under normal economic conditions the president might even prefer to see the ailing automakers reorganise through bankruptcy proceedings.
“Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms,” she said.
“However, given the current weakened state of the US economy, we will consider other options if necessary - including use of the TARP programme - to prevent a collapse of troubled automakers,” she said.
Perino was referring to the Troubled Assets Relief Programme (TARP), the $700bn financial sector bailout measure that was passed by Congress and approved by Bush in late October.
“A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time,” she said.
An automaker rescue loans package that was passed by the US House of Representatives on Wednesday ran into stiff opposition in the Senate because many Republican senators and some Democrats wanted tougher conditions to force automakers to restructure and cut costs - including mandatory wage reductions for union autoworkers in ?xml:namespace>
Democrats supporting the bailout loan bill insisted that it guarantee that all existing wage and retirement packages for Detroit autoworkers be maintained - a sticking point for Republicans who wanted union workers to make some concessions as well as automaker management.
Senator Mitch McConnell of
McConnell and other Republicans wanted the UAW to agree to lower Detroit-area autoworker wages to those paid by foreign car makers with production plants in
“It is upon that issue that we’ve reached an impasse,” McConnell said.
The White House and US Treasury Department are expected to announce soon what steps will be taken to provide TARP funds or other relief measures for the
($1 = €0.75)
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