Bush announces auto rescue

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Bush announces auto rescue
« Thread Started on Dec 19, 2008, 11:24am »

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Bush announces auto rescue
Posted: 09:23 AM ET
By Chris Isidore
CNNMoney.com Senior Writer
NEW YORK (CNNMoney.com) — President Bush announced a rescue plan for
General Motors and Chrysler LLC Friday morning that will make $13.4 billion in
federal loans available almost immediately.

A senior administration official briefing reporters said he expects that
GM and Chrysler LLC will be signing the loan papers to access the cash later
Friday morning.

The money will come from the $700 billion fund set aside to bailout Wall
Street firms and banks in October.

With these loans, Treasury will have committed virtually all of the $350
billion of that fund that it can hand out without additional authorization from
Congress. Once Congress releases the other $350 billion, the two automakers
will be able to borrow an additional $4 billion.

The loans are three-year loans but the money will have to be repaid
immediately if the firms do not show themselves to be viable by March 31. It is
expected that the companies will have to negotiate new agreements with unions
and creditors in order to do so.

The White House and Treasury Department signaled a week ago that they
were willing to use cash from the bank bailout fund to help keep GM and
Chrysler afloat after the Senate failed to vote for a $14 billion bailout for
the two companies. The bill had already passed the House and had the support of
the administration.