Bush announces rescue loans for US automakers

19 December 2008 14:49  [Source: ICIS news]

WASHINGTON (ICIS news)--President George Bush on Friday announced an emergency loan package of $17.4bn (€12bn) to rescue major US automakers from likely collapse and to prevent resulting and widespread job losses throughout the country.

In a statement at the White House, Bush emphasised that the rescue funds are a loan and that those Detroit auto manufacturers that take advantage of the credit line must pay back the money by the end of the first quarter next year.

Bush said that in ordinary times he would have preferred that the ailing carmakers go into bankruptcy and reorganise under court protection to hopefully become viable companies again.

However, he noted that in the midst of a recession, these are not ordinary times and the administration cannot afford to allow the auto companies to collapse or enter bankruptcy proceedings.

Survival of the Detroit automakers - General Motors, Ford and Chrysler - is of crucial importance to US chemical manufacturers because the automotive manufacturing sector is a key downstream consumer of chemicals, resins and derivative products.

Economists have warned that if even one of the Detroit-based car makers was to collapse, there could be hundreds of thousands of job losses across the country as companies dependent on auto manufacturing also slid into bankruptcy or closure.

Bush also emphasised that the multi-billion dollar loan package was only intended to give the car makers a brief window of opportunity to reorganise and develop a plan to return to viable operation.

He said that if by the end of March next year it was apparent that car companies which borrowed federal funds under the emergency loan package could not become viable operations, the federal government would recall the loans.

($1 = €0.70)

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By: Joe Kamalick
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