WASHINGTON — President George W. Bush said he’s “considering all options” for a bailout of General Motors and Chrysler, and he promised to move quickly.
Bush, in an interview airing Tuesday on CNN, said he felt an obligation to “make sure the economy doesn’t collapse,” creating bigger difficulties for President-elect Barack Obama, who takes office Jan. 20. He gave no hint as to when a decision would be made.
“I have abandoned free-market principles to save the free-market system,” Bush said. The U.S. is “in a huge recession,” he added.
GM and Chrysler are seeking $14 billion in emergency federal aid to keep operating through the first quarter of 2009. Without a cash infusion, the largest U.S. carmaker and No. 3 Chrysler may be only weeks from insolvency.
The U.S. Treasury may adopt a plan that would let a “car czar” or the Treasury secretary force the companies into bankruptcy if they fail to show they can survive without government aid, said Sen. Carl Levin, a Michigan Democrat.
GM and Chrysler would be required to submit proposals by March 31 showing how they would restructure to return to viability or lose U.S. support, Levin told reporters in Detroit on Monday. The Treasury plan would resemble a measure passed by the U.S. House last week and rejected by the Senate.
“The power rests in the hands of either the czar or the secretary of the Treasury to force bankruptcy by March 31,” Levin said.
Under the approach the administration is likely to use, Treasury Secretary Henry Paulson and his successor would “in effect” be the car czar because the Treasury Department would oversee the aid, Levin said.
The likeliest U.S. aid package will be loans and a so-called pre-packaged bankruptcy to get the automakers through to 2009, Moody’s Investors Service said in a note Tuesday. There’s only a one-in-four probability the U.S. will bail out the automakers with no bankruptcy, analyst J. Bruce Clark said.
The Bush administration agreed Friday to consider options including use of the Troubled Assets Relief Program after Senate Republicans refused to take up the plan passed by the House on Dec. 10. Senate Republicans sought more specific automaker conditions, such as pay in line with foreign manufacturers’ operations in the U.S.
GM spokesman Greg Martin declined to comment on the possible terms of a bailout.
“I will say that as other options for aid are considered, our commitment to an aggressive restructuring plan remains unchanged,” he said by e-mail.
