While everyone else is occupied by Wall Street bailout Congress authorizes $25b loan to auto industry
Posted on September 28th, 2008 by bile Tags: Afghanistan, bailout, bank, Chrysler Corp., Congress, finance, General Motors Corp, George W. Bush, Greg Martin, Honda, House of Representatives, Iraq, Nissan, Robert Nardelli, U.S. government, United States, United States Senate, Wall Street, WashingtonThe US Senate Saturday approved 25 billion dollars in loan guarantees for the financially strapped US auto industry, intended to spark a wave of automotive innovation.
The loan guarantees were included in a continuing resolution that included funding for the US government and the wars in Iraq and Afghanistan.
President George W. Bush has indicated that he intends to sign the bill.
“We’re very pleased Congress has chosen to act at this critical time,” said Greg Martin, director of communications for General Motors Corp’s Washington office.
GM had been subject of much speculation that it could be forced into bankruptcy.
The bill, which was approved by the House of Representatives on Wednesday, are the first loan guarantees for US carmakers since Congress approved a similar 675 million dollar measure for Chrysler Corp. in 1980.
Chrysler Chairman Robert Nardelli, however, said this week the loan guarantees should not be considered a rescue package for struggling carmakers. “This is not a bailout,” he said.
Under provisions of the new legislation, not only US carmakers are eligible for the guarantees but also suppliers and foreign automakers with plants in the United States that are more than 20 years old — Nissan and Honda’s US operations qualify.
Bailout in economics and finance is a term used to describe a situation where a bankrupt or nearly bankrupt entity, such as a corporation or a bank, is given a fresh injection of liquidity, in order to meet its short term obligations. Often bailouts are by governments, or by consortia of investors who demand control over the entity as the price for injecting funds.
Obviously Mr. Robert Nardelli and I have different definitions of ‘bailout.’
How about we let them burn just like the banks? The unions want to complain about it? Let’em! They have brought this on themselves by using the guns of government to minipulate and regulate the auto industry out of competitiveness. Though luck.
