The financial crisis takes its toll on the global economy with the US car industry feeling the grip on its neck. Car manufacturers have reported major losses and seek urgent help from the federal government but the Bush administration rejected the low interest loan sought for by the industry.
President-elect Barack Obama dances to the same tune playing during his campaign recognizing the need for more loans for the car industry. Obama revealed during a television interview that he has delegated his staff to study the potential solutions to the looming crisis making life difficult for car producers.
The auto industry is identified by the US president-elect to be the spine of American manufacturing and promises to prioritize the problem if the Congress will not be able to take action during their November 17 session.
The car industry was given a $25 billion funding by the government but this is to be allocated for developing more fuel efficient vehicles and not to resolve the cash flow problems experienced by big car manufacturers like GM.
GM officials expressed their urgency for a financial aid expressing that the situation might not be able to wait for the new president to take his seat in the oval office in January.
In exchange for funding, the car manufacturer offers to give the government preferred stock options, determine salary caps for its top executives, and accelerate their program for the production of fuel efficient cars.
GM sends the distress call as it reports cash burning amounting to $6.9 billion dollars in Q3 which decreases their reserves to $16.2 billion. The car manufacturer needs to have reserves of at least $11 to $14 billion to stay afloat.
