White House weighing auto options
The White House looks poised to take action to help the auto industry, and there are a few routes it could take. Stacey Vanek-Smith talks to Marketplace's Alisa Roth, who goes over what could happen.
The White House (iStockphoto)
More on Auto Industry, America's Financial Crisis
TEXT OF INTERVIEW
Stacey Vanek-Smith: Markets in Europe and Asia are riding high this morning on new signals from the federal government that a bailout will happen for the U.S. auto industry. A $14 billion rescue plan died in the Senate last week, and now the White House looks poised to take action.
Thought we'd check in with our very own Alisa Roth in New York to get the latest. Alisa, what is the White House saying?
Alisa Roth: Well, the White House has been saying since last week, when the loan package failed in Congress, it's been saying that it will do something. And Bush is saying that an abrupt bankruptcy would be devastating for the industry and for the economy. So it's pretty clear that something will happen. The real question is what. And there are a couple of possibilities. One is the automakers could get access to some of the Treasury Department's financial bailout. Another thing that's being tossed around are a series of short-term loans that would basically get the automakers to January, when President-elect Obama and the new Congress come in and take over. A third option that's been talked about would be a pre-arranged bankruptcy, so not an abrupt bankruptcy but sort of set it all up and take care of it that way.
Vanek-Smith: What is the hold-up?
Roth: The big hold-up is really trying to figure out how much the car companies need. Chrysler and GM are the ones who need the money. Ford says that it actually has enough money to last at least for a couple of months. But the White House experts apparently spent the weekend looking over the books and trying to figure out exactly how much money will do it. And the estimates, again, are ranging from something like $10 billion to $40 billion. So just figuring out how much money we're talking about is probably the biggest hurdle.
Vanek-Smith: Right, because I know that GM has said that it won't be able to last out the year. When do you think we can expect to see some bailout help from D.C.?
Roth: The White House says soon. The clock is obviously ticking, and everybody's very aware of the clock ticking. But it sounds like it probably won't be today. I would guess that before the week is out, we'll have a pretty solid sense of what's going to happen.
Vanek-Smith: Well, I'm sure we will talk to you more then. Marketplace's Alisa Roth, thank you so much.
Roth: You're welcome.
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