Will US auto giants be saved?

The Straits Times
Nov 13, 2008 | 7:10 AM
Will US auto giants be saved?
White House won't commit to saving US auto giants.

WASHINGTON - THE White House refused to say on Wednesday whether or not it considered troubled US auto giants seeking US government help to be too important to the US economy to be allowed to fail.

Asked several times whether the hallmark carmakers could be allowed to fail, or whether the resulting economic shocks would be too great, spokesman Dana Perino declined to answer directly.

'Hopefully, the companies will be able to figure out a way to survive, and it won't ever come to that. But it's just too early to say, and I shouldn't speculate on it,' she told reporters.

Asked whether she was saying that the automakers did not meet the criteria for 'too big to fail', the spokesman replied: 'I'm not saying that.' At the same time, she left unclear whether the White House considered the automakers to be 'viable' companies, a requirement if they are to receive emergency loans under a special US Energy Department programme.

'Congress was very wise in setting some limits on these loans,' she said.

'A non-viable company is probably not something that you want to help, because, in the long-run, the taxpayers wouldn't get their money's worth.'

Asked whether she was saying that the auto giants were a bad investment, Ms Perino replied: 'I didn't say that.'

'I'm not the judge of what is a viable company or not. That would be a determination made by the Department of Energy and the Treasury,' she said.

Ms Perino again rejected aiding the automakers under a US$700 billion (S$1 trillion) economic bailout package for banks as currently configured but signalled openness to possible congressional changes to the rescue plan.

'We feel that we have done what we could, with the statutes that have been authorised,' she said. 'We want these companies to succeed. We want all companies in America to succeed.'

The biggest US automaker General Motors warned on Friday that it would run out of cash in the first half of next year and fellow Detroit giants Ford and Chrysler are also in crisis.

President-elect Barack Obama, who gets the keys to the White House on January 20, has pushed for expanded aid to automakers during private talks on Monday with US President George W. Bush.

And Democratic congressional leaders have said they are prepared to take additional steps and pleaded for some part of the financial sector bailout plan to go to the battered auto industry. -- AFP