General Motors Corp and Chrysler LLC will get $13.4 billion in initial government loans to keep operating in exchange for substantially restructuring their businesses under a rescue plan announced by President George W Bush.
The money will be drawn from the Troubled Asset Relief Programmeme set up to bail out financial institutions. An additional $4 billion would be provided in February provided the second half of TARP's authorised $700 billion is released by Congress. The funds would allow GM and Chrysler to keep operating until March.
Winning the assistance is a reprieve for GM, the biggest US automaker, and third largest Chrysler after they said they would run out of operating funds as soon as this month. Bush is stepping in after Senate Republicans' refusal last week to take up a House-approved rescue raised the prospect that the companies would fail, costing millions of jobs.
"These are not ordinary circumstances," Bush said at the White House. "In the midst of a financial crisis and a recession, allowing the US auto industry to collapse is not a responsible course of action."