The deal could help GM and Chrysler avoid imminent bankruptcy. The administration said the funds are contingent on the companies showing they're financially viable and competitive by the end of March, otherwise they must pay back the loans in full.
President Bush said that under normal circumstances, he would let the free market decide the fate of the automakers. But "given the current state of automakers and the economy, a bankruptcy would not work best at this time. ... Consumers won't buy cars from bankrupt automakers [because] of warranty values," Bush said. Allowing the automakers "to collapse now would not be the responsible way to go," and could lead to chaotic bankruptcies that would be "painful to workers far beyond the automakers," he said. The government instead must "safeguard the broader health of the economy," Bush said.