President Bush is handing over a lot of work to President-elect Barack Obama, but he at least wants to take the issue of Detroit's automakers off Obama's plate for a little while. The White House did not respond in knee-jerk fashion to bail out cash-strapped automakers General Motors Corp. and Chrysler LLC; instead, they are taking their time to craft a plan as the economy dips further into recession.
Speaking at the American Enterprise Institute on Thursday, Bush said, "I believe that good policy is not to dump him a major catastrophe in his first day of office."
It wasn't in knee-jerk fashion, but Detroit got its share of the pie. Bush announced Friday that Chapter 11 would not work for the automakers at this time and they need time to restructure. He said $13.4 billion would be issued for December and January. The short-term financing would come from the Troubled Asset Relief Program, or TARP. The other $4 billion would come only if Congress approves it. Bush made it clear that the automakers had to become financially viable and pay the money back. If restructuring is not successful outside of bankruptcy, the government will help with an orderly one.
Our sister blog Dealscape recently reported that
GM is halting work on a $370 million plant in Flint, Mich., that was to manufacture the backup engine for its Volt plug-in hybrid car due to hit showrooms in 2010, and that
Chrysler will idle its manufacturing plants from Dec. 19 until at least Jan. 19.
Keep an eye out for continued coverage of the
Detroit Breakdown. -
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