President Bush said today he has yet to make up his mind what to do about the nation's faltering auto giants, and Treasury Secretary Henry Paulson said the administration would consider an "orderly" bankruptcy plan.
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.
Earlier in the day House Speaker Nancy Pelosi urged Bush to act with some urgency.
Pelosi warned that the nation can't afford to add to the currently high unemployment rolls that are already zooming at a record setting pace. More than 554,000 people applied for jobless claims just last week.
The California Democrat urged Bush to decide quickly to come to the rescue of General Motors and Chrysler to prevent "the imminent insolvency of the domestic auto industry."
She said 2 million U.S. jobs are riding on whether Bush helps the beleaguered auto industry.
The White House is wading through reams of financial statements provided by the car companies as the administration tries to decide whether to intervene and how to intervene.
Pelosi said the administration should simply adopt the accountability requirements that were included in a bill passed by the House last week, giving the government veto power over major business decisions at any car company that received federal loans. That bill died in the Senate when Republican senators insisted that unionized workers accept big cutbacks.
Since then, the White House has indicated that it is considering a bailout package that could be as large as $14 billion, but has also said a decision may not happen this week.
"I haven't made up my mind yet," Bush told the American Enterprise Institute in Washington today.
"This is a difficult time for a free-market person," Bush said. "Under ordinary circumstances, failed entities, failing entities should be allowed to fail."
The president suggested, however, that he wil do something.
"I have concluded these are not ordinary circumstances, for a lot of reasons," Bush said. "Our financial system is interwoven domestically, internationally. And we got to the point where if a major institution were to fail, there is great likelihood that there'd be a ripple effect throughout the world, and the average person would be really hurt."
Earlier, White House spokeswoman Dana Perino said, "I can tell you we're nearing a conclusion and we're very close."
She said it could still take until next week to finalize a decision, but said, "We're going to do something."
Perino said that among the options under consideration is an "orderly bankruptcy."
"There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about. That would be one of the options," she said.
Perino said today that the administration is aware of the urgency.
"It's clear that the automakers are in a very fragile financial condition and they're taking steps to deal with it," she said.
For weeks, the carmakers have insisted that they face a real deadline. Pressure grew for a deal as Chrysler announced Wednesday it will close all 30 of its manufacturing facilities in North America until Jan. 19. General Motors has told lawmakers it needs an infusion of $4 billion in taxpayer loans before the end of the year or the company will go bankrupt.
Chrysler's move to conserve cash will suspend production of its cars and trucks for the greater part of the month, affecting about 46,000 members of the United Auto Workers.
The Chrysler shutdown comes on the heels of a warning to dealers that the automaker may halt financing for stocking showrooms. Many dealers say that buyers are out there but that car loans are unavailable, resulting in a 20 percent to 25 percent loss in sales. Meanwhile, Chrysler is burning through more than $1 billion a month.
And General Motors, which also faces the possibility of collapse without a federal rescue, said Wednesday it will delay construction of a factory in Flint, Mich., set to produce the plug-in electric Chevy Volt, in order to conserve cash.
The Wall Street Journal reported today that Cerberus Capital Management LP, which owns Chrysler, had resumed merger talks with General Motors in an effort to shed some of the expense and to convince Washington it is ready for drastic changes.
But GM promptly issued a statement denying that merger talks had restarted.
"There is no truth to the Wall Street Journal report that GM is in negotiations with Chrysler," said GM spokesman Mike Meyerand. "There are no talks underway and GM is focusing all its effort on attaining a loan from the federal government."
GM and Chrysler had been in talks earlier this year to combine in order to survive the recession and slowing U.S. sales, but financing emerged as one of the biggest obstacles.
While many Americans and lawmakers alike have questioned the severity of the automakers' situation and whether they deserve federal aid, Chrysler and GM's announcements leave the fate of the entire auto industry unknown.
With Chrysler and GM suspending work, it leaves the deadline for a bill even more pressing.
Competing pressures on the White House make the negotiations difficult.
On Tuesday, some of the GOP senators who killed a congressional bill to save American carmakers last week have written to the president to say they don't believe "any amount of money" will save the struggling car companies without major changes to how they operate.
The seven senators sent their letter to President George W. Bush as the White House is considering whether to use a portion of the $700 billion in the Troubled Asset Relief Program to stave off the collapse of GM and Chrysler.
Those senators were joined in lobbying the White House by more than two dozen Republican members of the House who wrote to Bush to say, "American taxpayers cannot afford to save every company facing financial peril."
UAW Says They Have Already Made Sacrifices
Ironing out what concessions will be required of the car companies and the workers in any potential deal is a sticking point. After the House passed its measure last week, an effort to do so failed in the Senate when Republican senators insisted on sharp cuts for unionized autoworkers.
"Since labor makes up 10 percent of the cost of a vehicle, we agree that all stakeholders must come to the bargaining table," United Auto Workers president Ron Gettelfinger told ABC News. "The UAW has made difficult and challenging concessions in 2005 and 2007 negotiations, and we recognize that more may be required. However, we expect that the other stakeholders -- the board, management, suppliers, dealers and creditors -- must do their part as well, and they have some catching up to do."
Administration officials could provide a short-term fix to keep the companies afloat until next year, which would not necessarily be as much as the $14 billion in the congressional bill. They could also opt for a government-forced restructuring of the auto industry or decide to turn to "an orderly bankruptcy."
ABC News' Charles Herman, Yunji de Nies and Kirit Radia contributed to this report. And some information was contributed from the Associated Press.