December 20, 2008	Saturday	Zilhaj 21, 1429

WASHINGTON, Dec 19: President George W. Bush unveiled plans on Friday to provide $17.4 billion in emergency loans to faltering US carmakers in a dramatic step that would pull the industry from imminent collapse and save hundreds of thousands of jobs from falling victim to a deep recession.

Bush, seeking to bolster his legacy and bucking some fellow Republicans who would prefer to force the car industry to work out its problems without government aid, said it would be irresponsible in a time of economic crisis to let carmakers die.

The government will offer up to $17.4 billion in loans to the ailing US automakers and expects General Motors and Chrysler LLC to access the money immediately, a senior administration official said.

“If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers,” Bush said, warning that to do nothing would deepen and prolong the US recession.

US stocks rose in opening trading on Friday on the news of the government lifeline to the sector.

Some $13.4 billion of the total will be made available in December and January from a $700 billion Wall Street bailout fund that was originally designed to rescue struggling financial institutions.

The White House moved on its own after Democrats and Republicans in the US Congress were unable to reach agreement after weeks of negotiations that included desperate pleas on Capitol Hill from the auto chiefs.

Bush attached some conditions. The loans would be called back if the automakers cannot prove they are viable by March 31, an administration official said.

The three-year loans would require limits on executive compensation. Auto companies must demonstrate how they would become viable. They must pay back all their loans to the government, and show that their firms can earn a profit and achieve a positive net worth.

The automakers would also have to provide warrants for non-voting stocks. “This restructuring will require meaningful concessions from all involved in the auto industry — management, labour unions, creditors, bondholders, dealers, and suppliers,” Bush said.

He announced the loan programme just weeks before leaving office with low popularity ratings, an economy in recession and the country fighting two wars.

The collapse of the auto industry and its knock-on effect on the economy would have been another blow to his troubled legacy before he hands over to Democratic President-elect Barack Obama on Jan 20.

Both GM and Chrysler have said a bankruptcy filing is not an option they will choose because of the risk that it will drive more consumers away from their brands. Both companies have been forced to idle plants and lay off thousands of workers across North America.

Chrysler announced fresh cost-cutting measures amid news of the government loan programme.Ford Motor Co is not seeking emergency loans but has asked the government to consider standby credits it could draw on if its own position worsens more than expected in 2009 or if Chrysler or GM were to fail.

“This is wonderful. GM dealers, and Chrysler dealers, have been waiting for days and days to get receivables from the companies, such as delayed incentive payments. We’re happy to get the money,” said Raymond Ciccolo, a GM dealer in Boston, of the loan news.

“The question now is how to excite consumers to buy cars from January to March. We’re all sitting on millions of dollars of unmoving cars.”—Reuters