GM seeks $50bn bailout to avert meltdown
General Motors has called for an extra $50bn in new loans from Congress to help it survive tough economic conditions and pay for healthcare obligations for retirees. The car maker wants the new loans included in an economic stimulus package that is now more likely to come together early next year.
The $50bn would be in addition to the $25bn in loans that Congress passed in September to help re-tool car plants to build more fuel-efficient vehicles.
US car companies are bleeding cash and jobs. General Motors has admitted it could run out of money by the middle of next year unless it receives emergency federal assistance after piling up billions in third-quarter losses. Rival Ford has sustained heavy losses too.
The government faces a difficult choice. If it provides GM with a bailout, there is no guarantee the company will not need more money later to stave off bankruptcy, particularly with the economy weakening.
But a bankruptcy by GM or any other car maker would have huge consequences, given the millions of people employed by supplier companies, dealers and other small businesses that depend on the industry.
Barack Obama has indicated help may be on the way, saying Congress must pass an economic stimulus measure either before or just after he takes office in January.