Speaking at the the White House, President Bush said, "The actions I'm announcing today represent a step that we wish were not necessary. But given the situation, it is the most effective and responsible way to address this challenge facing our nation. By giving the auto companies a chance to restructure, we will shield the American people from a harsh economic blow at a vulnerable time."
Of the $17.4 billion, $13.4 will be made available immediately, and the remaining $4 billion will be opened up in February. Both companies will get $4 billion on December 29, while GM will get another $5.4 billion on January 16. Subject to Congressional approval of the second half of the Wall Street bailout funds, GM will then receive another $4 billion on February 17. The money is expected to be enough to carry the two companies through the holidays and the first quarter of 2009. But the money does come with some strings attached.
Part of the language of the loan agreement will give the companies three months to restructure into 'viable' companies. A structured bankruptcy proceeding will be provided for as well, to help boost their chances. The consequence for failing to convince the government that they've successfully reorganized by February 17, the agreement's deadline? The loans will be immediately 'callable', or repayable on demand, March 31.
The timing of the measure essentially takes the matter beyond the end of Bush's term, and lays it at Obama's doorstep. Nevertheless, it's something Congress couldn't - or wouldn't - come up with, and the industry is eager to step up to the challenge.
Chrysler CEO Bob Nardelli said in a statement, "These requirements will require consideration from all constituents, requiring commitment first in principal, leading to implementation this coming year. Chrysler is committed to meeting these requirements."
GM took a similar stance, saying, "We appreciate the President extending a financial bridge at this most critical time for the U.S. auto industry and our nation's economy. This action helps to preserve many jobs, and supports the continued operation of GM and the many suppliers, dealers and small businesses across the country that depend on us...We know we have much work in front of us to accomplish our plan. It is our intention to continue to be transparent as we execute our plan, and we will provide regular updates on our progress. "
Ford, which won't be receiving the funding because it has only requested a $9 billion line of credit, was nevertheless glad to see its own operations wouldn't be jeopardized by a failure of its main rivals. "The U.S. auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs, and further damage the already weakened U.S. economy," said CEO Alan Mulally.
The UAW later released a statement lauding the government's decision to act, but calling some of the provisions unfair. UAW President Ron Gettelfinger said, "While we appreciate that President Bush has taken the emergency action needed to help America's auto companies weather the current financial crisis, we are disappointed that he has added unfair conditions singling out workers. These conditions were not included in the bipartisan legislation endorsed by the White House, which passed the House of Representatives and which won support from a majority of senators."