Auto Bailout Fallout

Friday, December 12th 2008, 10:07 am
By: News 9

Wire Reports

NEW YORK - The markets are rebounding after President Bush said he may use bank bailout funds to help U.S. automakers.

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Several administration officials said no specific announcement of a bailout was imminent, suggesting there was still time before General Motors Corp. and Chrysler LLC, the companies in most peril, would run out of cash. These officials spoke on condition of anonymity, saying they were not authorized to discuss internal deliberations.

The Wall Street bailout fund was one of the few remaining options for GM and Chrysler, which have said they could run out of cash within weeks. President George W. Bush had originally refused to use the bailout fund to help the automakers, insisting that help come from Congress. But the White House said it must reconsider after the Senate failed to agree on a $14 billion rescue plan.

"Congress spoke last night. They don't have the votes to do anything," Perino told reporters on Air Force One as Bush traveled to a commencement speech in Texas. "They didn't get it over the goal line and so we have to consider what other options we would take." She declined to say when a decision would be made.

President-elect Barack Obama said he was disappointed that the Senate failed to act. "My hope is that the administration and the Congress will still find a way to give the industry the temporary assistance it needs while demanding the long-term-restructuring that is absolutely required," he said in a statement.

About $15 billion from the first half of the $700 billion financial bailout remains uncommitted. Treasury in the past two months has pumped out about $335 billion to banks and insurance companies. To begin tapping the second half of the bailout, the administration would first have to notify Congress, which could block it or put new conditions on how the money is used.