WASHINGTON — The White House weighed its options Saturday for preventing a collapse of the troubled auto industry, once the backbone of the U.S. economy. So far, the only thing certain is that the Bush administration wants to avoid the possibility of a disorderly bankruptcy of any of the Big Three.
General Motors and Chrysler have said they could run out of cash within weeks without government help.
“Administration officials are continuing to gather financial information from the automakers, assessing the data, their cash position going forward,” White House deputy press secretary Tony Fratto said Saturday. “We’ll take a look at that information, make some judgments and review our options.”
Any avenue of government rescue must surmount political obstacles and take into account the potential fallout on financial markets in a time of recession. The administration is keeping President-elect Barack Obama and his advisers abreast of its discussions.
“We’ll be focused on trying to get the policy right while considering the best interests of the taxpayer and our economy, and we’ll take the time we have available to do that right,” Fratto said. “No decisions have been made.”
The White House and congressional Democrats had agreed on a $14 billion measure that would have extended short-term financing to the industry and set up a “car czar” to make sure the money was used to turn the Big Three into competitive companies. The legislation died when Senate Republicans demanded upfront pay and benefit concessions from the United Auto Workers that union officials rejected.
The failure on Capitol Hill prompted urgent requests for White House intervention. Administration officials were dispatched to weigh the pros and cons of a range of other bailout actions.
White House and Treasury Department officials are keeping details of their discussions closely held for fear of affecting markets, but financial experts have zeroed in on a few likely avenues for helping the auto industry and its 3 million workers.
One way is to tap directly into the $700 billion financial rescue bailout fund to provide loans to the carmakers. Another is to use part of the bailout fund as a kind of collateral for emergency loans the automakers could get from the Federal Reserve.
The administration could do nothing, leaving the possibility that one or more of the automakers go bankrupt.
It could wait for the new Congress, flush with more Democratic votes when it returns in early January, to try again to get bailout legislation passed.
“In terms of what happens next, it seems like the real question is, ‘How long can GM really hold out?’ ” said James Gattuso, a research fellow in regulatory policy at the Heritage Foundation. “I’ve heard a couple of weeks, and I’ve heard through February. I think only the people on the inside of GM know that.”
For weeks, the White House has insisted that the $700 billion financial industry rescue plan enacted in October should be used solely to help financial institutions. On Friday, the White House signaled that it would consider using the so-called TARP, Troubled Asset Relief Program, to prevent auto manufacturers from collapsing.
