Big Three Bailout: Loans Coming, With Strings

December 15, 2008
This morning, the status of the Big Three bailout seems a little more surefooted, as President Bush is promising that he won't let Detroit go bankrupt and that a deal on loans could be imminent.

The total of money needed to prop up GM and Chrysler could be approaching $40 billion as the White House debates how to structure loans to those automakers to prevent a collapse.
The wire services report that the administration could use money from the TARP (Troubled Asset Relief Program) or use the TARP as collateral for loans to extend to the Big Three.

Senate Republicans are urging the White House to attach strings to any loan money--strings that would require pay and benefit cuts by the UAW if any loans are issued.

Meanwhile Carly Fiorina, former chairwoman of HP Compaq and McCain campaign strategist, says simply extending credit to carmakers could solve the problem. Appearing on Fox News, Fiorina says "$15 billion or $30 billion or $40 billion..is not sufficient to save them." The automakers need these bridge loans, but more fundamentally, she says, banks need to get back on track and lend money so all businesses can begin to recover from the financial panic.

More sobering, Fiorina says no matter how much money is pumped into the automakers, "jobs will be lost...this will not save companies."

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