Government Lemons

11Nov08

Barack is pressing a bailout for automakers.

President-elect Barack Obama would like the government to find additional authority to deal with the liquidity crisis in the American automobile industry, Obama’s transition co-chairman said on Tuesday.

The Obama team earlier leaked details of the disagreement over an auto bailout that arose between President Bush and Barack in their private meeting yesterday.

John Podesta said Obama stressed the need to help the ailing U.S. auto industry during talks with President George W. Bush at the White House on Monday.

“He’s hopeful the government will look for additional authority to deal with the short-term liquidity crisis … and get onto a program and a plan that would ensure that the auto industry can … continue as … independent companies …,” Podesta said in a briefing.

More on what Barack wants:

There are two primary ways President Bush could provide aid, either through the recently passed $25 billion in federal loans to help automakers retool (though automakers might needs those funds simply to make payroll) OR through the $700 billion in TARP (Troubled Assets Relief Program) funds, less than $500 billion of which has been allocated.

The Big Three automakers have asked for an additional $25 billion to help prevent their going into bankruptcy. On Saturday, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid asked Treasury Secretary Henry Paulson to consider using the TARP funds to help the automakers, though the White House seemed to reject that idea on Monday;



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