President George W. Bush has announced that the federal government will provide the U.S. automotive industry with access to $13.4 billion in bridge loans to prevent the companies from collapsing. In an address this morning, Bush said, "Allowing the U.S. auto industry to collapse is not a responsible course of action." A White House statement detailing the terms of the agreement says that the financing will be drawn from the $700 billion Troubled Asset Relief Program (TARP) fund. General Motors (GM) and Chrysler will receive the funds immediately and have access to an additional $4 billion in February if they are following the terms of the agreement. Both companies will have a March 31 deadline to demonstrate financial viability; the Treasury Department will call the loans back for immediate payment if it determines that this condition has not been met. In exchange for the money, GM and Chrysler must accept limits on executive pay, give the government access to their financial records, and not issue dividends until the debt is repaid. They must cut their debt by two-thirds in an equity exchange, make half the payments to a union retirement fund in equity, eliminate a program that pays union workers when they don't work, and make union costs and rules competitive with foreign automakers by December 31, 2009. Ford Motor Company has already said it will not require access to the funds.
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