US to provide $13.4-bn loan to bail out auto industry

December 19th, 2008 - 10:40 pm ICT by IANS  

Washington, Dec 19 (Xinhua) US President George W. Bush Friday said the government would provide $13.4 billion in short term loan to bail out the country’s crippled auto industry from bankruptcy.”In the midst of a crisis and a recession allowing the US auto industry to collapse is not a responsible course of action,” Bush told reporters here, noting a possible bankruptcy would deal “an unacceptably painful blow to hardworking Americans”.

The $13.4-billion loan, drawn from the $700-billion financial rescue fund, would be available this month and in January next year. Of the sanctioned amount, General Motors will get $9.4 billion while $4 billion will be given to Chrysler LLC, according to the US government.

An additional $4 billion dollars may be available in February.

General Motors Corp and Chrysler LLC have warned they could be collapse within weeks, while Ford Motor Co said it may not need the fund right now.

“These are not ordinary circumstances,” Bush said while announcing the aid, adding that there’s “too great a risk” that a bankruptcy filing would send the economy into a “deeper and longer recession”.

Meanwhile, Bush said the restructuring the auto industry would require “meaningful concessions” from all involved in the industry, emphasising the automakers must make reforms.

“The auto makers and unions must understand what is at stake and make hard decisions necessary to reform,” Bush said. “We intend to send a clear message to everyone involved in the future of American automakers.”

All restructuring must be completed by March 31 to show how they would restructure to ensure their survival.

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