Auto Bailout

December 20, 2008 12:00:00 AM PST
Facing the possibility that the failure of General Motors and Chrysler could pull down the broader economy.President Bush announced a bailout for the two auto makers. Obama is also preparing to deal with the fallout from the auto industry rescue plan.

Both car companies, who said they were in danger of filing bankruptcy before the year's end, immediately praised the White House.

$13.4-billion dollars in emergency loans are being made available to GM and Chrysler, which are in worse shape than Ford. Another $4-billion dollars could be released to Chrysler in February, but only with Congressional approval.

The agreement states that the loans could be called back in March if the companies are not viable. Treasury Secretary Henry Paulson will oversee this government intervention until the Obama Administration takes office in January.

There are conditions attached to the loans like capping executive pay and the government blocking transactions over $100-million dollars.

President Elect Obama was consulted and reportedly did not raise an objection to the plan that he is likely to revise after the inauguration.



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