President Bush today approved $13.4 billion in emergency loans for General Motors and Chrysler, and will make another $4 billion in loans available in February. The loans are intended to keep the automakers alive until March 31, at which point the Obama administration will get to decide how to proceed.
In a press conference this morning, Bush said that he’d normally let the companies fail, since the problems have resulted from bad business models, but the recession makes urgent action necessary. “These are not ordinary circumstances. In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action,” he said.
The proposed requirements for the loans include limiting executive pay and getting rid of private corporate jets. They don’t, however, include requirements about improving fuel economy or building the next generation of automobiles. But if the companies can’t show they’ve reformed by the end of March, the federal government can demand repayment of the loans, which might lead the companies declare bankruptcy or fail altogether.