The Bush administration came to the rescue of the deeply troubled US auto industry Friday, agreeing to an emergency loan of $13.4 billion in exchange for concessions from carmakers and their workers. If they fail to produce a plan by March 31, the automakers will be required to repay the loans, which they would find very difficult. The rescue announced could include up to $4 billion more pending congressional approval. “The time to make hard decisions to become viable is now, or the only option will be bankruptcy,” President George W. Bush said. “Allowing the auto companies to collapse is not a responsible course of action.” He said that a bankruptcy was unlikely to work for the auto industry at this time and would deal “an unacceptably painful blow to hardworking Americans” across the economy. One official said $13.4 billion would be available this month and next, $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. Both companies have said they soon might be unable to pay their bills without federal help. Ford Motor Co. has said it does not need immediate help. Bush said the rescue package demanded concessions similar to those outlined in a bailout plan that was approved by the House but rejected by the Senate a week ago. It would give the automakers three months to come up with restructuring plans to become viable companies. Among the “targets” established by the loan would be a two-thirds reduction in debt by exchanging debt for equity, more flexible work rules and cuts in wages to make the companies competitive with foreign manufacturers established on US soil. The funds will be drawn from the Treasury's $700 billion Troubled Asset Relief Program (TARP). An additional four billion dollars from the TARP will be available in February, contingent upon congressional approval of the second portion of that program. “The automakers and unions must understand what is at stake and make hard decisions necessary to reform,” Bush said.
