Saturday, Dec 20, 2008
General Motors and Chrysler will receive up to $17.4 billion in short-term loans from the US government in return for deep concessions, including giving the government the option of taking a partial stake in the companies.
Citing danger to the national economy, the Bush administration approved an emergency bailout of the two auto makers on Friday.
“Allowing the auto companies to collapse is not a responsible course of action,” President Bush said in announcing the plan at the White House. Bankruptcy, he said, would deal “an unacceptably painful blow to hardworking Americans” across the economy.
According to details of the plan made available to CNBC.com, the package involves $13.4 billion in immediate short-term financing from the $700 billion Wall Street bailout fund, known as TARP.
General Motors [GM 4.49 0.83 (+22.68%) ] will get $9.4 billion and Chrysler will get $4 billion. Both companies, which have said they soon might be unable to pay their bills without federal help, are expected to tap that money immediately.
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Ford Motor [F 2.95 0.11 (+3.87%) ], which says its liquidity is adequate for now, is not included in the package announced Friday. The automaker still seeks a $9 billion line of credit from the federal government, the Wall Street Journal reported.