Bush leaves bailout decisions to Obama
The $17.4 billion that President Bush made available to General Motors and Chrysler today is being seen by auto industry analysts as only a temporary lifeline. Big decisions await the next administration. Nancy Marshall Genzer reports.
General Motors Chairman and CEO Rick Wagoner responds to President Bush's $17 billion emergency loan to the Big Three auto companies during a press conference in Detroit. (Bill Pugliano/Getty Images)
More on The Economy, Auto Industry, Politics, America's Financial Crisis
TEXT OF STORY
Tess Vigeland: President Bush gave U.S. automakers an early holiday gift today. After weeks of backing-and-forthing among the House, Senate and White House ? and no agreement in sight ? the administration used a portion of the bank bailout money to put $17.4 billion under Detroit's tree. Auto industry analysts say it's a temporary lifeline, kind of a gussied-up bridge loan. Marketplace's Nancy Marshall Genzer reports.
Nancy Marshall Genzer: This bridge loan reaches right into the Obama administration.
Gerald Meyers: I wouldn't call it sleight of hand but I do think it's a matter of kicking the can to the next administration.
Gerald Meyers ran the American Motors Corporation for four years, and now teaches at the University of Michigan.
Meyers: I think what Bush has done is said I don't know how to solve this problem, let's see what Obama can do.
The first thing Obama will have to do is pay up. President Bush's plan gives GM and Chrysler $13.4 billion right away. Obama will have to release four billion more from the remaining Treasury bailout money. And it will be up to Obama to decide if GM and Chrysler meet a series of requirements by March 31. If they don't, they have to give the money back. GM CEO Rick Wagoner:
Rick Wagoner: I'm highly confident we'll be able to meet that test.
Wagoner is confident because it's a test with no wrong answers. The automakers have to prove they're financially viable, meeting certain flexible requirements. But if they miss the benchmarks, that's OK. They just have to explain why. Honest - the dog ate my budget. But Michelle Krebs of Edmunds autoobserver.com says flexible targets are appropriate.
Michelle Krebs: Frankly I think that's only fair because the automakers do not have control over the entire economic situation.
And independent auto analyst Maryann Keller says President Bush didn't have time to lay out more specific requirements.
Maryann Keller: You think about when this whole thing blew up. We're really only talking about, what, five weeks? That's really not enough time to assess what has to happen.
Unfortunately for President Elect Obama, he'll have plenty of time.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
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