As we reported earlier today, the $14 billion bailout plan painstakingly crafted by Congressional Democrats and the White House failed to find the support it needed to make it past a Senate vote-but other options are now emerging. The Bush administration has said that it will consider using money from the TARP fund-which was initially conceived to help the financial sector-to keep GM and Chrysler out of bankruptcy until a new session of Congress convenes in January. The Treasury Department has also said that it is ready to consider using the funds since Congress has failed to act.
"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," the Treasury said in a statement.
Up to this point, the Bush administration has been solidly against the idea of drawing money from TARP to bolster the ailing domestic automakers. Despite urgent soliciting from House Speaker Nancy Pelosi for the President to draw money from the fund weeks ago, the administration instead called for Congress to use money from $25 billion previously approved by Congress for the automakers to invest in alternative energy research. However, the failure to reconcile differences between UAW workers and Senate Republicans left hopes of a Congressional solution to the issue dead on the Senate floor.
Shares of automakers and suppliers fell sharply worldwide as news of the failed bailout spread-the DOW index dropped more than 200 points when it opened this morning, while prices of gasoline, copper, rubber and other raw materials also fell significantly. The Bush administration is taking ample notice of the financial carnage that has ensued Congress' failure.
"Given the current weakened state of the U.S. economy, we will consider other options if necessary-including use of the TARP program-to prevent a collapse of troubled automakers," White House Press Secretary Dana Perino said in a statement. "A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time."