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White House: Automakers Could Get Bailout Cash

The White House said today that financing companies owned by Detroit automakers could qualify for assistance under the $700 billion financial bailout package, The Post's Dan Eggen reports.

"It’s possible that some of those financing arms could be a part of the rescue package," said White House press secretary Dana Perino. "That’s one of the reasons Treasury has been in contact with them."

Any help from the rescue plan would come in addition to a $25 billion package of loans for revamping domestic auto factories, which has been approved by Congress, but is unlikely to be disbursed for months.

Perino said the Treasury Department would have to analyze whether the financing companies would qualify for help under the federal rescue program, which is primarily aimed at injecting capital into the banking system.

"We’re trying to work with them as much as we can," Perino said of efforts to help the beleaguered U.S. automakers. "There are some things we may or may not be able to do. It’s still going to take a little while for us to work on it."

GMAC, GM's financing unit -- created to lend money to auto dealers to allow them to buy new cars for resale -- is only partially owned by GM. In 2006, GM sold a 51 percent stake in GMAC to Cerberus Capital, the same private equity firm that bought an 80 percent stake in Chrysler from Daimler in 2007.

-- Frank Ahrens

By Frank Ahrens  |  October 27, 2008; 1:12 PM ET
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Comments

I hate Corporate Welfare, it eliminates competition and competition made this country great. Corporate Welfare reminds me of Dick Cheney and Halliburten. Halliburten was given a free ride on domestic and foreign soil. They fraudently wasted alot of money and then went into the liability avoidance mode. Now their headquarters are being moved Offshore to avoid taxation, the ultimate insult to Americans.

In my economic world, Public Assets utilized for private capitalization causes negative growth. According to this therom bailing out Detroit will eventually lead to inflation. If that is true where is the offset.

Don't get me wrong, I am into stimulating the economy through employment but why was Detroit so slow to retool ? Seems Detroit is still focused on marketing to those recessionary proof nevermind the common man and his family needing transportation.

Ground up stimulis instead of Voodoo Economics could give consumers an advantage by helping Americans buy new and more fuel effecient vehicles. What if Uncle Sam gave rebates directly to consumers buying new fuel effecient cars ? Of course Detroit would have to raise their own capital to retool. But just because Detroit retools does not mean average people will be buying new cars during a reccession.

I don't think Americans ought to get into the Automobile manufacturing industry through bail outs. Competition means that the strongest survive, merger if necessary. The product line must compete with global markets. And foresight would lead me to suggest adaptation to local and available sources of fuel in supply now like Natural gas and bio-fuels to a certain degree. Oh, and the deisel engine is coming back for passenger vehicles too.

In the long run what is the best choice for a stronger America today and tomorrow ? See, the Bush Administration acts in crisis mode only. They say we "must" do this because they are in crisis. Procrastination lead to crisis. Rushed decisions will probably lead to more chaos.

Posted by: truthhurts | October 27, 2008 3:32 PM | Report abuse

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