US govt expected to give more financing to ailing automakers

The Obama administration will probably extend more short-term aid to General Motors and Chrysler...

Written by New York Times | Detroit | Published:March 29, 2009 10:36 pm

The Obama administration will probably extend more short-term aid to General Motors and Chrysler on Monday,but will impose a strict deadline for bondholders and union workers to make concessions that would help the ailing automakers become viable businesses and avert bankruptcy.

President Obama’s auto task force is expected to say that despite its recommendation of more federal assistance for GM and Chrysler,bankruptcy could still be a possibility for either company,according to people close to the discussions. The task force is in its final stages of determining how to keep the two Detroit companies afloat. Meanwhile,the automakers are negotiating retiree health care costs with the United Automobile Workers union,and their debt burden with bondholders and lenders.

But both immediate and longer-term help will be tied to completing the restructurings that GM and Chrysler began after receiving $17.4 billion in federal loans.

The administration is expected to set a short deadline — weeks rather than months — to compel the automakers,their lenders and the UAW to reach agreement.

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