ROBERT SIEGEL, host:
From NPR News, this is All Things Considered. I'm Robert Siegel.
MICHELE NORRIS, host:
And I'm Michele Norris. It looks like the struggling auto companies will get some help, but not from Congress. The White House changed course today and said it was not about to let a big chunk of the U.S. auto industry fall into bankruptcy. And so the Bush administration may after all provide funds from the TARP, that's the billions of dollars originally set aside for banks and other financial companies.
SIEGEL: That turnabout came after a deal fell apart last night in the Senate. In a moment, we'll hear what some auto workers have to say about that. First, this new offer of financial aid is a reprieve, a short-term fix. The companies still face big problems, and as NPR's Frank Langfitt reports, it will be up to President-elect Barack Obama and a new Congress to solve those problems.
FRANK LANGFITT: Last night, the outlook for GM and Chrysler was bleak. The bridge loan had crashed in the Senate. But this morning, a reluctant White House said it was ready to lend the companies money to stay alive. White House Press Secretary Dana Perino said, quote, "the current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry." And the Treasury Department said it was, quote, "ready to prevent imminent failure." Democrats who've been pushing for a bailout were pleased by the news. This is Senator Christopher Dodd from Connecticut.
Senator CHRISTOPHER DODD (Democrat, Connecticut): So, I'm encouraged this Friday afternoon that at some point today or over the weekend the White House will announce a course of action that will avoid the kind of catastrophe that all of us are worried about.
LANGFITT: In Detroit, United Auto Worker President Ron Gettelfinger breathed a sigh of relief.
Mr. RON GETTELFINGER (President, United Auto Workers of America): I think it's great news, the response that we've been getting out of both the White House and out of Treasury.
LANGFITT: Gettelfinger had spent the night before battling Senate Republicans over proposed wage cuts. Gettelfinger had refused. Now, his members look to have another chance.
Mr. GETTELFINGER: So, we're prepared to move forward. That still means there's a lot of work to be done here.
LANGFITT: He's right. The White House says it's willing to help, but it hasn't formally announced a bailout or any details. Earlier this afternoon, a GM official told me, quote, "we're very encouraged." But he also said the company was still in discussions with the White House on terms. The most likely source of money would be the Treasury Department's Wall Street bailout fund. There's about $15 billion left. For many in the auto industry, the last 24 hours have been a wild ride. Neil De Koker described it like this.
Mr. NEIL DE KOKER (President and CEO, Original Equipment Suppliers Association): Yesterday, last night, was very disappointing. I ran out of vodka last night, that's how bad it was.
LANGFITT: De Koker heads the Original Equipment Suppliers, it's the largest auto supplier trade group in the country. He says Chrysler and GM owe auto suppliers more than $8 billion right now. Without federal help, he says the company's would have gone under and taken many suppliers with them. De Koker says federal money will buy time, but not much else. He thinks demand for parts this month and next could plunge to levels not seen in three to five decades. And he said suppliers continue to press Chrysler to make sure the company can keep paying.
Mr. DE KOKER: And I think there's a meeting this afternoon to show suppliers that, financially, they are in good shape. And a few months ago, that was much better than today. Today, I think, it's basically, you know, hey, guys work with us. We're working with the government. We should get through this.
Ms. ANNETTE SYKORA (Chairwoman, National Auto Dealers Association): I never lost all hope.
LANGFITT: Annette Sykora chairs the National Auto Dealers Association. She says without a bailout for Detroit, hundreds of dealers would have gone under in the coming weeks.
Ms. SYKORA: I can picture this catastrophe and think it would have meant a very bleak Christmas for all of our employees.
LANGFITT: But many dealers face a tough future no matter what. More than 700 have already gone out of business this year. And GM and Chrysler are promising to cut more in 2009 in exchange for federal funds. Sykora says the recession will kill off others.
Ms. SYKORA: We may leave another 900 still in the coming year. But that's still much less than if the story had been different this morning.
LANGFITT: Even as many in the auto industry exhaled, critics were skeptical about Detroit's future. Senator Bob Corker, the Tennessee Republican, said that bailout or not, Chrysler would never make it as a stand-alone company. Most people who follow the business agree. Frank Langfitt, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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