Bush Considering 'Orderly' Auto Bankruptcy

White House press secretary Dana Perino addressed the bankruptcy question earlier in the day and emphasized there were still several possible approaches to assisting the automakers, including short-term loans from the Treasury Department's $700 billion Wall Street bailout program.

In this Sept. 12, 2008 file photo, assembly line robots weld the front cab of Chrysler's new 2009...

In this Sept. 12, 2008 file photo, assembly line robots weld the front cab of Chrysler's new 2009 Dodge Ram pickup being assembled at the Warren Truck Plant in Warren, Mich. Chrysler LLC on Wednesday, Dec. 17, 2008 said it would extend its holiday for an additional three weeks to adjust production with slowing demand and conserve cash. The move affects all 30 manufacturing plants. Operations will be idled at the end of the Friday, Dec. 19th shift. the earliest plants will reopen is Jan. 19, 2009. A few plants will reopen on Jan. 26. (AP Photo/Carlos Osorio, file)

(AP)

The Big Three automakers said anew that bankruptcy wasn't the answer, as did an official of the United Auto Workers who called the idea unworkable and even dangerous. GM said a report that it and Chrysler had restarted talks to combine was untrue.

House Speaker Nancy Pelosi said on Capitol Hill that grim new unemployment data heightened the urgency for the administration "to prevent the imminent insolvency of the domestic auto industry."

The California Democrat said Bush has the legal authority to act now, and should attach the accountability standards that were included in a $14 billion House-passed and Bush-supported carmaker bailout that died in the Senate last week. That plan would have given the government, through a Bush-appointed "car czar," veto power over major business decisions at any auto company that received federal loans.

Pelosi spoke after the government announced that initial claims for unemployment benefits totaled a seasonally adjusted 554,000 last week.

The comments in Washington came a day after Chrysler LLC announced it was closing all its North American manufacturing plants for at least a month as it, General Motors Corp. and Ford Motor Co. await word on government action. General Motors also has been closing plants, and it and Chrysler have said they might not have enough money to pay their bills in a matter of weeks.

Separately, there were worries that GMAC LLC, which provides financing for GM vehicle and dealer loans along with home mortgages, could be forced to file for bankruptcy itself. GMAC was having trouble finding adequate support from its bondholders for a debt transaction that would allow it to become a bank holding company and gain eligibility for the $700 billion rescue package.

Prices of GM and Ford stocks fell sharply Thursday after the remarks out of the White House. Ford, unlike General Motors and Chrysler, is not seeking billions in federal bailout loans, but a collapse of the other two could hurt Ford as well.