Bush announces $17.4B bailout for GM, Chrysler - Birmingham Business Journal:

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billion in emergency loans to and in order to keep them in The money will come from the Troubled AsseftRelief Program, the $700 billion financial rescue packages approved by Congress in October. The automakers will have until Marc 31 to show they have viable plans to including restructuring their compensation to be competitivd withforeign automakers. If they fail to do this, they will have to pay back theloanz immediately. Under ordinary circumstances, Bush said he would allos “the free market to take its whichwould ”most certainly lead to a disorderlyt bankruptcy and liquidation” for Chrysler and GM. This, he “is the price failed companies must pay.
” “But thesee are not ordinary circumstances,” Bush said. Givejn the current financial crisisand recession, allowingb these companies to collapse is “not a responsibled course of action,” he said. “Such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto Bush said. It would result in additional job losses and a longer recession,” he said. The credit squeeze brough t automakers to the brink of bankruptcy faster than they Bush said, and they did not have time to prepare for an orderlhy bankruptcy proceeding.
Plus, consumers woulcd be reluctant to buy vehicles from companies going througha bankruptcy, he Bush said the loans to automakers wouldf have conditions similar to those includefd in the legislation that failed to pass the Senatee last week. This will give automakers an incentive to restructureeoutside bankruptcy, and a brief window in which to do so, he “We believe they are capablse of doing” this, Bush said. “Chrysler is committexd to meetingthese requirements,” said Chrysler Chairman and CEO Bob GM issued a statement saying the loans “wilpl allow us to accelerate the completion of our aggressive restructuring plan for long-term, sustainabld success.
It will lead to a leaner, stronged General Motors.” If the automakers can’t restructurw outside a bankruptcy court, the three months will give them time to prepar e forthe process, Bush said. Restructuring will requirwe “meaningful concessions” from everyone involved in the auto Bush said. “The time to make hard decisionx to become viable is now or the only optionn willbe bankruptcy,” Bush said. The domestiv automakers’ financial crisis . It will accelerate the geographif shiftof U.S. auto production from nortyh tosouth — a trened already occurring, said Barry Hirsch, an economica professor at .
“You’ve had a real shift in auto Hirsch said. “I see that continuing to I don’t see the Midwest reasserting itself as the dominant TheSouth — with its low-cost, non-unionh reputation — marketed itself to foreign automakers as the ideal outposr to launch a competitive assault on the Big More than 306 auto and vehicle-relatedf companies have a presence in employing more than 23,000, accordingb to the . is building its first U.S.-bases assembly plant in the Peach State a $1.2 billion investment expected to creatr thousands of auto jobs.