Detroit automakers await deal on auto loans

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(Agencies)
Updated: 2008-12-15 18:20

The administration has several options. It could tap the $700 billion financial rescue bailout fund to provide loans directly to the carmakers or use part of that fund as collateral for emergency loans the automakers could get from the Federal Reserve.

A car of General Motors's German unit Opel is pictured at the entrance to the Chancellery in Berlin November 17, 2008. Detroit automakers are awaiting a financial lifeline from the White House to provide short-term stability to two companies on the brink of collapse which the Bush administration is currently working on. [Agencies]

It also could do nothing, leaving open the possibility that one or more of the automakers could go bankrupt. The White House has warned a collapse of the auto industry would severely hurt the economy.

The White House is keeping President-elect Barack Obama and his advisers informed of the discussions. If administration officials choose not to provide the money now, the Obama team could wait for the new Congress, which will have stronger Democratic majorities. But the delay could risk bankruptcy filings by GM and Chrysler.

Gov. Jennifer Granholm, D-Mich., said other countries were providing aid to their automakers and the loans were essential to make the US less dependent on foreign oil.

If the companies don't get help, "we'll be replacing our reliance on foreign oil with a reliance on foreign batteries because it's going to be the battery that's driving the electric vehicle in the future," Granholm said.

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