The White House on Friday unveiled a $17.4 billion rescue package for the troubled Detroit auto makers that avoids bankruptcy.
"Allowing the auto companies to collapse is not a responsible course of action," President George W. Bush said.
Speaking from the White House, he said that a bankruptcy was unlikely to work for the auto industry at this time and would deal "an unacceptably painful blow to hard-working Americans" across the economy.
The deal would extend $13.4 billion in loans to General Motors Corp. and Chrysler LLC in December and January, with another $4 billion likely available in February. The deal is contingent on the companies' showing that they are financially viable by March.
Maybe I've missed it, but all I've heard is claims that a Chapter 11 bankruptcy won't work for the auto companies - and no one has explained why that statement is true.
Bankruptcy reorganization has worked for other companies - why are the automakers different? And if all Bush is going to do is require them to reorganize, why not let a judge oversee that instead of administration or treasury officials who obviously haven't got a clue?
Here's the $64,000 question - what happens if they're not "financially viable by March"??? Do they get MORE money or will they be forced into bankruptcy after having squandered our tax dollars?
Of course, this also means Treasury needs the second half of the $700 billion released. Also from the Wall Street Journal:
"Treasury Secretary Henry Paulson said he wants Congress to release the second half of the $700 billion financial rescue package, setting up what is expected to be a bruising dialogue with lawmakers from both parties who have expressed frustration with the way he has navigated the financial crisis.
Mr. Paulson said the $17.4 billion the Treasury committed to provide General Motors and Chrysler means that the government has "effectively" allocated the first $350 billion that Congress authorized in early October for the Troubled Asset Relief Program to stabilize the financial markets. Mr. Paulson said he has "confidence" that "we have the necessary resources to address a significant financial market event.""