White House to provide loans to auto giants

The federal government will make billions of dollars worth of loans available to U.S. automakers to enable them to restructure and invest in fuel-efficient auto technologies like electric vehicles.

At a press briefing on Friday, President Bush announced the outlines of the plan which he said was meant to avoid a "disorderly bankruptcy."

Auto companies will have access to $13.4 billion from the $700 billion that was authorized to shore up the country's financial institutions. Another $4 billion would become available for the carmakers in February. The companies have until March 31 to demonstrate that they have plans to be "viable companies" or the loans will be called back.

The deal also requires the automakers to give the government loans priority over other creditors, limits on executive pay and elimination of perks like corporate jets.

Bush said that the terms of the loans will be similar to the ones that Congress nearly passed last week. At the last moment, a disagreement over the timetable for bringing U.S. workers wages in line with foreign competitors derailed weeks of talks.

Because Congress failed to pass that measure, Bush said the executive branch has stepped in and tapped the funds available in the Troubled Asset Relief Program (TARP). He said that all parties--auto companies, unions, creditors, and suppliers--will need to make significant concessions.

"Given the situation, it is the most effective and responsible way to address this challenge facing the nation," Bush said. "We will shield the American people from a harsh economic blow at a vulnerable time and give American workers an opportunity to show the world once again that they can meet challenges with ingenuity and determination."

Tech investments
General Motors and Chrysler are expected to take out the loans because they are considered financially vulnerable and said to be close to running out of cash.

Ford, meanwhile, has said the loans are necessary because a failure of other large car companies would disrupt its own operations and suppliers.

With the cash lifeline, these companies should be able to pursue the business plans they presented to Congress to regain financial footing.

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Their product plans calls for investments in fuel-efficient vehicles, including electric powertrains. The Big 3 have all announced plans to make gas-electric cars which will bring a jump in fuel efficiency.

On Wednesday, General Motors said that it has delayed construction of a new plant to manufacture an engine for the Chevy Volt and Cruze, another highly touted fuel-efficient car. A company representative said that plans were on hold temporarily because GM is cutting back expenses.

In a statement, Chrysler CEO Bob Nardelli said that the company is committed to "meeting these requirements."

Material from CBSNews.com was used in this report.

[Manhattan2]

The billions the government is spending must start going toward viable concepts that will combat the future tide of rising oil prices that will one day come again. Mitch Govansky

[aarthabenn]

ofcourse some measures shud be taken to save the automobile world,did anyone ever think tat GM company will face such situation,dont know wat happens ,much needed help is awaited from the side of Govt..

regards
aarthabenn
[Editors' note: Spam deleted]

[Commander_Spock]

Go GWB Go! Go "General Motors" (GM) Go! Go "Chrysler" G! Go "Ford" Go! - Go IBM's OS/2 Warp.

Remember these words anyone: "It's The Economy - Stupid!"

[Dalkorian]

I guess someone shamed fuhrer bushit into this. He just doesn't want to be known as the terrorist who allowed the big 3 to die while pocketing obscene oil profits.

[Commander_Spock]

"These Boots Are Made For Walking; And, One Of These Days They Are Going To Walk All Over - You"! Still - MISSION ACCOMPLISHED.....!

[smallvoice]

I think about half the traffic on any road at any given time is driven by illegal aliens, at least here where I live, Los Angeles, California. And I think the illegal aliens are responsible for most of the traffic accidents and stopovers, caused by irresponsible driving, DUI or not, and recklessly ill vehicle maintenance. They put a heavy load on roads bridges for a long time until the traffic is cleared.
And also, here are too may women out on the streets strutting around to take man?s role into heir hands.
I am not against women. I am for enriching women for their proper roles in our society. I value their inputs.
Many times, women have insights about many things better than men. But their primary role is at home.

So, I think, to fend off this seeming economic slow-down, we need to enforce the immigration law, first.
We need to educate our ladies, first.

Then, we need to do some repair work that is urgent. This time, however, we need to do it rightly at the first time and at every time.
It is always cheaper and faster, and safer, not to cut corners. ?Let all things be done decently and in order.?

After the urgent repairs are done, then, we cannot spend massive amount of money for so-called ?infrastructure.?

We must build our military, and build it beyond comparison. We must build houses. We must grow our groceries, chickens and cows. We must build manufacturing plants. We must build schools. We must build hospitals. We must build our churches.