The Bush administration is looking at "orderly" bankruptcy as a possible way to deal with the desperately ailing US car industry, the White House said this evening.
With General Motors, Chrysler and the rest of Detroit anxiously holding its breath and waiting for a federal rescue, White House press secretary Dana Perino said: "There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about."
US President George W Bush, asked about an auto bailout, said he hadn't decided what he would do but didn't want to leave a mess for Barack Obama who takes office a month from next Saturday.
Mr Bush, like Ms Perino, spoke of the idea of bankruptcies orchestrated by the federal government as a possible way to go — without committing to it.
"Under normal circumstances, no question bankruptcy court is the best way to work through credit and debt and restructuring," he said during a speech and question-and-answer session at the American Enterprise Institute, a conservative Washington think tank. "These aren't normal circumstances. That's the problem."
Ms Perino said the White House was "very close" to a decision — though she wouldn't give a timetable. She emphasised there were still several possible approaches to assisting the industry, including short-term loans from the Treasury Department's $700 billion Wall Street bailout program.
The Big Three car companies said again today that bankruptcy wasn't the answer, as did an official of the United Auto Workers who called the idea unworkable and even dangerous. GM said a report that it and Chrysler had restarted talks to combine was untrue.
House Speaker Nancy Pelosi said on Capitol Hill that grim new unemployment data heightened the urgency for the administration "to prevent the imminent insolvency of the domestic auto industry."
The California Democrat said Mr Bush has the legal authority to act now, and should attach the accountability standards that were included in a $14 billion House-passed and Bush-supported carmaker bailout that died in the Senate last week. That plan would have given the government, through a Bush-appointed "car czar," veto power over major business decisions at any auto company that received federal loans.
Ms Pelosi spoke after the government announced that initial claims for unemployment benefits totaled a seasonally adjusted 554,000 last week.
The comments in Washington came a day after Chrysler LLC announced it was closing all its North American manufacturing plants for at least a month as it, General Motors and Ford await word on government action. General Motors also has been closing plants, and it and Chrysler have said they might not have enough money to pay their bills in a matter of weeks.
AP