$17.4bn loans for US carmakers
Friday, 19 December 2008 03:00
The US government is offer loans worth $17.4 billion (£11.6 billion) to carmakers.
The loans, announced by George Bush in the White House, will however come with strings attached, as with the financial bailout, with executive bonuses and perks cut.
The three-month bridging loans gives carmakers until March 31st to put up plans for their survival or they will have to repay them.
"The time to make decisions to be viable is now. The only other option is bankruptcy," the US president said.
"Auto companies must demonstrate how they will be viable," he said.
He said a collapse would lengthen a recession.
He added giving the carmakers time to reorganise would shield US citizens from the effects of the global recession
Mr Bush said restructuring under Chapter 11 bankruptcy was unlikely to work, as consumers would stop buying cars - for fear of lost warranties and alck of replacement parts.
Both Chrysler and General Motors have been forced to close car plants over Christmas for extended periods as well as lay off staff.
They have warned without state aid they could go bust.
"Our focus turns to fully and rapid implementing restructuring plan," said General Motors chief executive Richard Wagoner.
He added the restructuring was "a blue print for a new General Motors".
He thanked the US government for its support and pledged to "re-invent the company.
"Our mission is to lead an economic recovery in America."
It is reported auto bosses could be barred from using private jets.
This follows three of the heads of the US's biggest firms heading to Washington from Detroit on private jets for the initial Congressional hearing into state help.
At the time, Congressman Gary Ackerman said: "It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."
The three-month loan allows the carmakers to get through Christmas, and leaves the problem to Bush's successor Barak Obama, who has already announced far larger stimulus plans for the US economy.
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