Bush offers $17.4 billion to bail out GM, Chrysler

19 December 2008

The Bush administration has offered up to $17.4 billion in emergency loans to ailing US automakers General Motors and Chrysler LLC, reports quoting White House sources said.

Announcing the loan programme, president George W Bush said it would be irresponsible on the part of the government at a time of economic crisis to let the car makers collapse.

But, some of the funds must come from the second half of the $700 billion financial rescue fund after exhausting the first $350 billion in less than three months.

The Treasury which has exhausted nearly $335 billion of the first part of the $700 billion economy bailout package, mostly to recapitalise banks, has agreed to lend $13.4 billion of the remaining to General Motors and Chrysler.

The loan, spread over three years, would require the automakers to limit executive compensation and other perks, and also provide warrants for non-voting stocks.

The remaining $4 billion in aid is contingent on the administration seeking access to the second half of the $700 billion financial rescue plan, known as the Troubled Asset Relief Program, the administration official said.