WASHINGTON - The White House weighed its options yesterday for preventing a collapse of the troubled auto industry. So far, the only thing certain is that the Bush administration wants to avoid the possibility of a disorderly bankruptcy of any of the Big Three.
General Motors Corp. and Chrysler L.L.C. have said they could run out of cash within weeks without government help.
"Administration officials are continuing to gather financial information from the automakers, assessing the data, their cash position going forward," White House deputy press secretary Tony Fratto said yesterday. "We'll take a look at that information, make some judgments, and review our options."
Any avenue of government rescue must surmount political obstacles and take into account the potential fallout on financial markets in a time of recession. The administration is keeping President-elect Barack Obama and his advisers abreast of its discussions.
"We'll be focused on trying to get the policy right," Fratto said. " . . . No decisions have been made."
The White House and congressional Democrats had agreed on a $14 billion measure that would have extended short-term financing to the industry. The legislation, however, died when Senate Republicans opposed it.
The failure on Capitol Hill prompted urgent requests for White House intervention. Administration officials were dispatched to weigh the pros and cons of a range of other bailout actions.
One might be to tap directly into the $700 billion financial rescue bailout fund to provide loans to the carmakers. Another is to use part of the bailout fund as a kind of collateral for emergency loans the automakers could get from the Federal Reserve. The administration also could do nothing, leaving open the possibility that one or more of the automakers could go bankrupt. It also could wait for the new Congress, flush with more Democratic votes when it returns in early January, to try again to get bailout legislation passed.
"In terms of what happens next, it seems like the real question is 'How long can GM really hold out?' " said James Gattuso, a research fellow in regulatory policy at the Heritage Foundation. "I've heard 'a couple of weeks' and I've heard 'through February.' I think only the people on the inside of GM know that."