Mich. Gov. urges "quick" federal loans to automakers
DEARBORN, Michigan (Reuters) - U.S. automakers need "quick loans" from the federal government beyond the $25 billion loan package already approved in order to prevent one of them from failing because of the tight credit markets, Michigan Governor Jennifer Granholm said on Thursday.
"We need to see some additional quick loans so that the industry can make it through the next six to 12 months," Granholm, a Democrat, told reporters at an event in Dearborn, Michigan to mark the production of a new truck model by Ford Motor Co.
"The alternative is worse. The alternative is the industry doesn't have access to funds and we lose a company or two. We don't want to do that," Granholm said.
Granholm and five other state governors sent a letter to Treasury Secretary Henry Paulson on Wednesday urging "immediate action" to promote liquidity for the U.S. automakers. A copy of the letter was released by Granholm's office on Thursday.
The Bush administration approved $25 billion in low-interest loans last month to help automakers and suppliers meet new fuel economy standards by retooling plants.
Granholm said the industry needed additional loans and that the new federal lending should not have strings attached such as mandated progress toward improved fuel economy.
Her comments came at a time when General Motors Corp and Cerberus Management Capital are in talks about combining GM and Chrysler LLC. A combination of the two automakers is widely expected by analysts to lead to massive job cuts.
Asked whether federal aid to automakers should be conditioned on a minimizing of job losses in a merger, Granholm said, "The kicker is we don't know what the discussions will end up being so it's difficult for us to put conditions on something when we're not exactly sure what it is."
Granholm said she was meeting with local economic development leaders in Warren, Michigan, on Friday to discuss the impact of a potential merger between GM and Chrysler and how to help people who might be affected.
"The bottom line is that all three automakers need some liquidity, some assistance with cash and they need it right now," Granholm said.
The sharp downturn in auto sales this year has left analysts questioning whether GM, Chrysler and Ford Motor Co have the liquidity to withstand the slump.
The industry's crisis has set off fierce lobbying ahead of the November 4 U.S. presidential election, with auto industry supporters arguing that a bankruptcy of an automaker would have a cascading impact across the country.
(Reporting by Soyoung Kim 1-313-384-4438; editing by Carol Bishopric)
