WASHINGTON, Dec 13: Struggling US carmakers weighed their options on Saturday after the White House said it could tap a $700 billion rescue package to save them from immediate collapse.
“Given the current weakened state of the US economy, we will consider other options, if necessary -- including use of the TARP programme -- to prevent a collapse of troubled automakers,” spokeswoman Dana Perino said, referring to the Troubled Asset Relief Programme conceived to help financial services firms.
And the US Treasury Department “will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry,” said spokeswoman Brookly McLaughlin.
Lawmakers are due back January 6.
Perino, speaking aboard President George W. Bush’s official Air Force One jet, declined to say when a decision would come but said the White House understood “the urgency of the situation.”
Government officials did not rule out the prospect of a bankruptcy for one or more of the companies, but vowed that it would not be “uncontrolled,” meaning that enough financing would be provided to enable a reorganisation, the paper said.
United Automobile Workers union President Ron Gettelfinger welcomed the White House and Treasury announcements as “great news” but worried about the details and pleaded for the funds to come “as quickly as possible.”
Gettelfinger, who has access to the financial records of the Big Three, has said General Motors will run out of cash before 2009 without government help and Chrysler will not be far behind. Struggling Ford says it is in better shape.
After GM announced on Friday that it was idling 30 per cent of its North American production “in response to rapidly deteriorating market conditions,” Canada’s government promised to aid its portion of the Big Three auto sector, as soon as its southern neighbour decided on its own package.
“This support will be at an amount that would be approximately proportional to our share of the Detroit three production in North America,” Industry Minister Tony Clement said.
The Canadian aid would amount to $2.8 billion, or some 20 per cent of the $14billion figure being discussed in the United States.
Democratic Senate Majority Leader Harry Reid said he was “encouraged” by the Bush administration’s announcements and “appreciative of the administration’s change of heart” on his longstanding push to use TARP funds.
For months, Bush had categorically refused to tap the TARP to save the iconic US carmakers, but the collapse in the Senate of alternative legislation bringing $14 billion in bridge loans forced his hand.
The measure would have required the manufacturing giants to engage in painful restructuring to ensure their long-term survival and repayment of the government monies or face bankruptcy proceedings.
The House of Representatives passed the bill on Wednesday, but it collapsed the following day in the Senate on strident opposition from Republicans who blamed unions in a dispute on the timing of bringing their wages in line with those paid by foreign automakers to non-unionised workers in US states.
Gettelfinger denounced the wage debate as a “subterfuge” by anti-union Republicans eager to “pierce the heart of organised labour” and charged that they had demanded more concessions from workers than other parties.
The legislation would have provided GM and Chrysler bridge loans to operate until March 31, the date by which they must have crafted a restructuring plan that ensures their long-term survival while repaying government aid.—AFP