The White House tossed out no lifeline for the teetering auto industry Sunday, although President Bush reiterated that he was considering using money from the $700 billion financial bailout fund to provide loans to the carmakers.
“An abrupt bankruptcy for autos could be devastating for the economy,” Mr. Bush told reporters Monday 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.”
Mr. Bush wouldn’t give a precise timetable but said, “This will not be a long process because of the economic fragility of the autos.”
White House officials said they did not expect to make an announcement Monday. The administration is considering ways to provide emergency aid to General Motors Corp. and Chrysler LLC, which have said they could run out of cash within weeks without federal aid.
Sen. Bob Corker, Tennessee Republican, who blocked legislation that would have provided $14 billion in loans to the automakers, said he had spoken with the White House early Sunday. “I don’t think they yet know what they’re going to do,” he said. Ron Gettelfinger, the president of the United Auto Workers, said the union had not held discussions with the White House.
The aid is expected to benefit GM and Chrysler, and discussions involve the amount of funding and any potential conditions. Ford Motor Co. has said it has enough cash to survive 2009 but asked Congress for a line of credit in case the financial markets deteriorate.
“I’m optimistic they’re going to do something significant. I don’t think the White House wants bankruptcy at one of the Big Three automakers as part of their legacy,” said Sen. Sherrod Brown, Ohio Democrat.
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 create an office for a “car czar” who would ensure that the money would transform the Detroit automakers into competitive companies.
After the legislative defeat, the administration said it was considering several options, including using money from the $700 billion financial bailout fund to provide loans to the automakers.
Mr. Corker and other Republicans sought a compromise that would have insisted that the carmakers restructure their debt and bring wages and benefits in line with those paid by Toyota, Honda and Nissan in the U.S. The legislation died when Republicans demanded upfront pay and benefit concessions from the UAW that union leaders rejected.
Sen. Debbie Stabenow, Michigan Democrat, said Republican leaders in the Senate did not want an agreement and the loans were needed to buy time for the companies to restructure. “Manufacturing is on the edge in this country. This is not the time for a political agenda,” she said.