"We are abandoning free market principles in order to save free markets!" - George Bush
Here was the immediate result in the market:
GM and Chrysler Will Get $13.4 Billion in U.S. Loans
Dec. 19 (Bloomberg) -- General Motors Corp. and Chrysler LLC will get $13.4 billion in initial government loans to keep operating in exchange for a restructuring under a rescue plan that President George W. Bush will announce this morning.
The money will be drawn from the Troubled Asset Relief Program and the automakers will get an additional $4 billion from the fund in February for a total of $17.4 billion in assistance, according to a statement from the Bush administration. The money would allow GM and Chrysler to keep operating until March.
Under the terms of the plan, if the companies can’t demonstrate financial viability by March 31 the loans will be called and the money must be returned, the statement said. The government’s debt would have priority over any other debts. The companies also must provide the government with warrants for non-voting stock.
The companies also must accept limits on executive compensation and management and labor must negotiate new wage and benefit agreements by the deadline, according to an administration official who briefed reporters on the plan.
Government officials will examine all financial statements and records of the car companies. The government has the authority to block any transaction over $100 million.
The package is intended for GM and Chrysler initially; Ford Motor Co. has said it can continue operations under current circumstances.
Bush is scheduled to announce the plan at 9 a.m. Washington time from the White House.
To contact the reporters on this story: John Hughes in Washington at Jhughes5@bloomberg.net; Robert Schmidt in Washington at firstname.lastname@example.org;
Last Updated: December 19, 2008 08:54 EST