Thus, the Bush administration, which pledged Friday to keep up manufacturers in the short term, assess the possibility of a much greater effort, but would face a series of complex decisions concerning the terms of the assistance and the possibility of one or more manufacturers into bankruptcy (protection of Chapter 11).
Moreover, the method of lifting the debate is necessary funds, with only $ 15 billion (or less?) To allocate the first installment of $ 350 billion plan to rescue the financial industry, commonly called Paulson plan. This means that the administration reaches to release the second tranche, which would surely arouse the irritation of some lawmakers already intrigued by the use of the first part of the package and control operated on the banks supported.
The WSJ said that the Bush administration also try to determine the amount needed to support the "Big 3". A plan from $ 10 billion ... $ 40 billion or more "would be discussed, but we understand where the money could come in the absence of release of the second part of TARP for banks. Lawmakers are also likely to consider that the rest of this $ 700 billion must now serve Americans and the prevention of seized property.
It is also to assess the scale of the needs of manufacturers. Last week, some politicians believed that $ 8 billion would be sufficient to survive manufacturers until early next year. Sunday, someone close to the situation quoted by the Wall Street Journal confided that the envelope would be necessary rather than 10 to more than $ 30 billion for the collective needs of industry.
The Bush administration, which had spent the weekend in the nose of manufacturers to try to get an idea, must also come to obtain concessions from workers, dealers, and holders of debt manufacturers. Without these concessions, the industry would need further and further injections of cash in the future, delegates considered critical. And "it is unlikely that the Treasury (U.S. Treasury Department) to wrest concessions to all affected parties" as part of an agreement on loans to builders, says the WSJ.
The judge journal that a more effective way to win these concessions would be for the government to establish some sort of agreement bankruptcy pre-arranged with one or several manufacturers. An investment would allow bankrupt companies and the government to obtain a better lever action, especially vis-à-vis the legal and contractual rights of creditors. "The thing that worries us is a disorderly bankruptcy," said an official of the administration to the newspaper. "All other options are open", insisted that person.
Yet some analysts believe instead that one or more manufacturers into bankruptcy, including a "arranged", could tarnish the reputations of all the companies and discourage consumers from buying cars. Suddenly, the Bush administration could finally be content to provide the funding necessary to enable GM and Chrysler to see the new year (and the new administration), while getting some concessions. It would then Obama clan and the new Congress to decide future action.
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