U.S. President George W. Bush comments on the automaker’s industry in the Roosevelt Room at the White House in Washington, December 19, 2008. Bush said the government will provide ailing U.S. automakers financial aid while they implement plans to restructure because otherwise their collapse could send the economy into a deeper and longer recession.
Today, President Bush announced that he will extend $13.4 billion of the $700 billion Wall Street bailout to Detroit for immediate use. Initially projecting that over $30 billion was needed to keep them afloat, if Detroit finds the initial $13.4 billion inadequate, Pres. Bush has also earmarked an additional $4 billion that can be dispersed in February by the Obama administration should they see fit. An unexpected move given the Republican parties staunch opposition and subsequent stonewalling of the auto rescue package put forth before the Senate last week, President Bush explained that his executive maneuver was necessary in order to avoid a dire economic catastrophe.
Although obviously differing in dollar amounts, many of the tenants of President Bush’s loan agreement mirror those outlined in similar legislation drafted by Congress earlier this month. As per the terms of the loan, automakers must post a positive net profit by March 31, 2009 and present a clear plan for future productivity. Should they fail to do so, the federal government reserves the right to call in the loan, essentially forcing the defaulting company into bankruptcy.
Source: Detroit Free Press
Image Cred: Reuters Pictures