Congress Close to $15 Billion Loan for Automakers

On Sunday, Senate Banking Committee Chairman Christopher Dodd reported that Congress and the White House are close to granting GM and Chrysler $15 billion in immediate loans to tide them over until the Obama administration takes over January 20. Ford, the healthiest-if any automaker can be called healthy these days-of the Detroit three, has said it can survive into 2009 without a loan.

Senator Dodd and other lawmakers are confident an agreement will be made, but cannot guarantee that enough votes can be garnered to deliver the law to Bush for signing. The new legislation allows for a government administrator to make sure industry promises are kept before any additional aid is given. The administrator would also be able to enforce any conditions drafted into the legislation.

Senator Dodd also called for the resignation of GM CEO Rick Wagoner as a condition for the automaker to receive the loan. The demand followed President-elect Obama’s sentiment Sunday that any automaker heads who were unwilling to make the tough choices needed to restructure their operations should be ousted. Obama has said repeatedly that the domestic industry cannot fail.

U.S. companies have shed almost 2 million jobs since the recession began last year. 1.25 million of those jobs have been eliminated in the last three months, 533,000 in November alone-the biggest drop since 1974. GM and Chrysler have pointed out that the massive job losses that would undisputedly follow bankruptcy for either company could be the push that sends the U.S. economy from a recession into a depression.

Source: Automotive News