After a lot of hemming and hawing, President Bush came through for two US automakers today, extending $17.4 billion in emergency loans to keep General Motors and Chrysler from going belly up.
It was a move that President Bush said he would not have made if the economy was doing fine.
“The actions I’m announcing today represent a step that we wish weren’t necessary,” Mr. Bush said in the Roosevelt Room at the White House.
Several interesting points here need to be noted. For one, there is no restructuring mandated by this deal. Yes, GM and Chrysler will have to prove they are “viable” in the new year, but no concessions were extracted in writing.
We also need to note that Ford is not going to take any federal money. These loans are just for GM and Chrysler, as Ford is in a much better financial position.
Realistically what this does is punt the ball into 2009, and leave the next step to the Obama Administration and the Democratic-led Congress.
They will have to determine if Detroit deserves billions more in aid, or if it is just a black hole for taxpayer dollars.
The money for these loans will come from the Wall Street bailout.
If you are interested, you can read the loan terms for Chrysler at http://www.treas.gov/press/releases/reports/chrysler%20final%20term%20&%20appendix.pdf
General Motors is at http://www.treas.gov/press/releases/reports/gm%20final%20term%20&%20appendix.pdf