The Bush administration is looking at “orderly” bankruptcy as a possible way to deal with the desperately ailing U.S. auto industry, Treasury Secretary Henry Paulson said Thursday as carmakers readied more plant closings and a half million new jobless claims underscored the deteriorating national ecnomy.
With General Motors, Chrysler and the rest of Detroit anxiously awaiting a White House decision on billions of dollars in emergency federal loans, Paulson said bankruptcy for Detroit automakers should be avoided if possible but that an orderly reorganization may be the best option to keep them from collapsing.
“If the right outcome is reorganization or bankruptcy, then isn”t it better to get there through an orderly process?” Paulson said in a speech to a business forum Thursday night in New York.
Paulson said it was too risky to simply let the automakers fail.
“When you look at the size of this industry and look at all those that it touches in terms of suppliers and dealers … it would seem to be an imprudent risk to take,” he said.
President George W. Bush, asked earlier about an auto bailout, said he hadn”t decided what he would do but didn”t want to leave a mess for Barack Obama who takes office a month from Saturday. A White House decision on helping the troubled automakers could come as early as Friday.
Bush, like Paulson, spoke of the idea of bankruptcies orchestrated by the federal government as a possible way to go — without committing to it.
“Under normal circumstances, no question bankruptcy court is the best way to work through credit and debt and restructuring,” he said during a speech and question-and-answer session at the American Enterprise Institute, a conservative Washington think tank. “These aren”t normal circumstances. That”s the problem.”
