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GM and Chrysler Getting More Federal Aid? |
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Sunday, 29 March 2009 |
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Monday will likely see the federal government giving both GM and Chrysler more aid, but there are strings attached.
The auto task force created by President Obama will likely recommend that the federal government should give further assistance to Detroit-based automakers GM and Chrysler. This will not jsut be a blank check, however. Any further assistance will be tied to demands that the car manufacturers settle disputes with the UAW auto union and the bondholders of the companies.
Also, assistance loans made after tomorrows expected actions will be dependent upon the two companies' progress in implementing the restructurings planned after the intial round of bailouts. Despite these payments, however, administration officials have not completey ruled out allowing the companies to degenerate into bankruptcy.
In a formal announcement to be made tomorrow, President Obama will also address the long-erm future of GM and Chrysler. Issues to be addressed will probably focus on the company creating eco-friendly vehicles that are viable in global markets and do not simply cater to the large-car tastes of Americans.
Ford, the other big Detroit automaker, has not requested any aid from the government and claims that it has enough cash on hand to finance its own restructuring efforts. These efforts closely mirror what has been mandated for GM and Chrysler, but Ford is in a better financial situation, giving it better negotiating leverage with the auto union and bondholders.
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