Agence France-Presse (AFP Washington) is reporting that US carmakers, GM, Ford and Chrysler, are likely to partially succeed in their bid for multi-billion dollar bail-out loans. Leaders in the US Congress are reported to have reached 'in principle' agreement in throwing a lifeline to the crippled 'big three'.
Un-named Democratic Party sources are quoted as saying that Congress will now agree to a short-term loan package of at least USD$15 billion - just under half the sum being sought by GM, Ford and Chrysler.
Rescue of the giant automakers is now critically urgent to prevent them sliding into bankruptcy and putting potentially millions of jobs at stake. US jobs data from last month alone shows that 533,000 US jobs were lost. Ramping up pressure on Congress, United Auto Workers union boss Ron Gettelfinger warned GM could be lost "by the end of the month" without immediate bail-out loans.
While Democratic House Speaker Nancy Pelosi has reportedly indicated her approval of the bail-out, drawing funds from the USD$25 billion energy-efficient stimulus fund, she has made it clear that the assistance is short term only, and that the automakers must repay the loans quickly.
GM, Ford and Chrysler had sought USD$34 billion in assistance. The question now is whether the reported USD$15 billion will be enough to pull all three back from the brink, or simply delay the inevitable for one or more of them.
Chrysler, it has to be said, looks most vulnerable. The smallest of the three and with the weakest model line-up - notwithstanding nameplates like Jeep, the iconic Viper, Dodge Ram, Charger and 300C in the stable - it looks to be in a terrible position. Having been rescued from bankruptcy in 1979-80 with a tax-payer funded (then) USD$1.2 billion bail-out, Congress may yet decide that its time has now come. Certainly, GM and Ford would make a far bigger hole in the ground if they fell.
GM alone asked for USD$12 billion in short-term loans and a USD$6 billion 'line of credit'; Ford was chasing USD$9 billion, and Chrysler USD$7 billion. You can't fit those numbers into the figure Congress is likely to approve.
Our guess is that the new loans will simply be to keep the car makers afloat until President-elect Obama can take the helm. Then the really hard decisions will be made.