Friday, December 12, 2008
Focus on White House in auto bailout saga
WASHINGTON, Dec 12 (Reuters-By Matt Spetalnick ) - The Bush administration said on Friday it could be willing to provide emergency aid to the teetering U.S. auto industry, keeping open the prospects for a bailout the day after Congress failed to approve a deal.
Warning of dire consequences for the recession-hit U.S. economy if the once-mighty automakers collapsed, the White House -- in a reversal of policy -- said it was ready to consider dipping into a $700 billion Wall Street bailout fund to help keep the companies afloat.
'The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry,' White House spokeswoman Dana Perino said.
Democratic leaders and the main U.S. auto workers union appealed to Bush's Republican administration -- now in its final weeks before turning over to Democratic President-elect Barack Obama -- to provide emergency funds after a Senate deal to save Detroit's Big Three collapsed in acrimony late on Thursday.
The failure of the $14 billion bailout plan in Congress sent markets reeling around the world. Shares in Toyota Motor Corp the world's biggest carmaker, lost a tenth of their value, and European automakers also closed sharply lower.
But signs that the White House and U.S. Treasury Department were prepared to mount a last-ditch effort to help the carmakers buoyed Wall Street, and large initial losses were mostly recouped.