United States president-elect Barack Obama said all parties involved in the US auto industry should come together to formulate an economic survival plan.
In an interview with 60 Minuteson CBS, Obama acknowledges that automakers are struggling in a slowing economy, but says he is not in favor of transferring funds directly to the industry. "For the auto industry to completely collapse would be a disaster in this kind of environment. So it's my belief that we need to provide assistance to the auto industry. But I think that it can't be a blank check" he said. Obama said he hopes the White House and Congress can talk about providing "assistance that is conditioned on labor, management, suppliers, lenders all of the stakeholders coming together with a plan", adding they should create "a bridge loan to somewhere as opposed to a bridge loan to nowhere". The US Senate will on Monday discuss emergency aid for the country's Big Three automakers: General Motors Corp., Ford Motor Co., and Chrysler LLC. The automakers have been seeking 25 billion US dollars in federal loan guarantees. Earlier on Sun day GM corporation CEO Rick Wagoner warned that auto industry bankruptcies would have a devastating impact on the US economy, many times larger than the aid automakers are seeking. "This is an issue of the whole auto industry, if that becomes under severe pressure, the impact on the whole US economy will be devastating," Wagoner said in an appearance on a NBC television station in Detroit. Detroit's Big Three CEO are scheduled to testify before the US Congress this week but there's no unanimous decision on the issue. Democrats have moved to direct 25 billion US dollars of loans to the Detroit-based automakers. But an auto industry bailout has hit stiff opposition from Republican senators and representatives who question whether the automakers would be viable even with the support. The Bush administration has warned pushing a bailout using the 700 billion USD financial rescue fund already approved could lead to partisan gridlock and has suggested loosening restrictions on 25 billion of low-interest loans already approved for investments in fuel efficiency improvements. Wagoner said GM's financial needs stem directly from the Wall Street financial crisis, and the aid automakers seek should not be looked at in terms of "federalizing a business". "The financial system is failing to supply the credit that is necessary for small businesses, big businesses, any businesses to operate on a daily basis". The path out of bankruptcy would not be simple said Wagoner. "his idea that you just go into Chapter 11 and hang around for three months and agree to reduce your debt obligations and don't pay your retirees, this is a fantasy," Wagoner said. "Most people will stop buying the cars of a bankrupt company". US auto sales have plunged to their lowest level in over a quarter of a century and GM's shares are at levels of the early fifties.