Fed to Provide $17.4b to GM, Chrysler
GM and Chrysler Motors will receive $17.4b from federal loans to avoid bankruptcy. However, the two companies will have to emerge with their reorganization plans and if they fail doing this, the will repay the amount instantly.
The loan is being provided under certain conditions that also include possible concessions from the firms, dealers and UAW.
The US Govt. has approved the Troubled Assets Relief Program and the will come from this program.
In the first phase, GM and Chrysler will get $13.4b, while another $4.00b will be provided if needed further.
Chrysler says that it will receive $4b in aid, while $9.4b would be available for General Motors, however, this portion has not been announced yet.
The White House has concluded that the collapse of these biggest US automakers would be a serious setback for the already troubled economy.
In a national address, president Bush said, “The bankruptcy of these two firms could send the US economy into a longer and deeper recession.”
Bush also said that if the firms failed to produce worthwhile results and economy worsened, at least this loan would give them some time for an organized bankruptcy.
The big three carmakers of Detroit have been badly criticized by the govt. officials and congress, but President Bush said that the firms had to face the current situation because of worldwide economic recession that these firms failed to foresee.