Automakers await loan deal

The president said a carmaker bankruptcy could be devastating for the economy.

ABOARD AIR FORCE ONE (AP) — Detroit automakers got public reassurance Monday from President George W. Bush that short-term government help for the industry is in the works and could come soon.

“An abrupt bankruptcy for autos could be devastating for the economy,” Bush told reporters aboard Air Force One during an unannounced trip to Iraq and Afghanistan.

“We’re now in the process of working with the stakeholders on a way forward. We’re not quite ready to announce that yet.”

Bush wouldn’t give a precise timetable but said, “This will not be a long process because of the economic fragility of the autos.”

The Bush administration is considering ways of providing emergency aid to General Motors Corp. and Chrysler LLC, which have said they could run out of cash within weeks without help from the government.

The industry employs nearly 100,000 people at assembly plants and parts plants around Ohio, a state whose ties to the car companies are second only to Michigan.

In Washington, a Treasury Department official said Monday that no decisions have been made on what type of support to provide Detroit automakers.

Treasury spokeswoman Brookly McLaughlin said department officials are continuing to assess the information they have received from the auto companies. Treasury officials are providing regular briefings to the White House, but she said there was no estimate on when a decision might be made.

Sen. Carl Levin, D-Mich., said in Detroit that he expects Bush’s solution to help the Detroit automakers will follow the previous deal Bush reached with congressional leaders.

The deal approved by the House provided loans for Chrysler LLC and General Motors Corp. to help them survive until March 31, but it was blocked by some Republican senators. Ford Motor Co. has said it has enough cash to survive 2009.

Levin says he expects GM to get $8 billion and Chrysler $7 billion under the Bush administration’s plan.

He said the Treasury secretary likely would become the “car czar” and oversee restructuring the automakers.

Sen. Bob Corker, R-Tenn., said he spoke with the White House early Sunday and no decisions had been made. “I don’t think they yet know what they’re going to do,” Corker said. Ron Gettelfinger, the president of the United Auto Workers, said the union had not held discussions with the White House.

Last week, Congress failed to approve $14 billion in loans to help the automakers. The plan would have provided short-term financing to the industry and created a “car czar” who would ensure that the money would transform the Detroit automakers into competitive companies.

The administration, after the legislative defeat, said it was considering several options, including using money from the $700 billion financial bailout fund to provide loans to the carmakers.

Bush reiterated Monday that tapping the financial bailout fund remains an option.