WASHINGTON, D.C. – The White House today announced it would loan two of the nation’s three largest automakers over $13 billion of taxpayer money to keep the companies solvent until January. Senate Republican Whip Jon Kyl issued the following statement:
“I am very disappointed. The Senate rightly rejected providing funds under the same conditions set by the President because the terms were deemed insufficient. The White House’s action is also directly contrary to Congressional intent regarding use of the financial stabilization funds and sets the precedent for the new administration to use the next tranche of funds for any applicant with political clout.
“The President justified his action with a false choice: it’s either this plan or abrupt liquidation of the companies. The White House seems to think that the industry didn’t have time to deal with the problem or prepare for an orderly bankruptcy, which is false. And the President argued that customers would not purchase from companies undergoing reorganization under Chapter 11, despite assurances that Members of Congress would support federal backing of car company warranties. The majority of leading economists believe reorganizing under Chapter 11 is the best option for these companies to become more competitive.
“This bailout not only sets a bad precedent and thwarts the will of Congress; it also is unlikely to force the changes needed for the companies to be competitive and sets the stage for additional taxpayer support in the future. Where will it stop?”
