    [Public Papers of the Presidents of the United States: George W. Bush (2008, Book II)]
    [December 20, 2008]
    [Pages 1505-1506]
    [From the U.S. Government Publishing Office www.gpo.gov]

    The President's Radio Address
    December 20, 2008

        Good morning. For years, America's automakers have faced serious
    challenges: burdensome costs, a shrinking share of the market, and
    declining profits. In recent months, the global financial crisis has
    made these challenges even more severe. Now some U.S. auto executives
    say that their companies are nearing collapse and that the only way they
    can buy time to restructure is with help from the Federal Government.
        This is a difficult situation that involves fundamental questions
    about government's proper role. On the one hand, government has a
    responsibility not to undermine the private enterprise system. On the
    other hand, government has a responsibility to safeguard the broader
    health and stability of our economy.
        Addressing the challenges in the auto industry requires us to
    balance these two responsibilities. If we were to allow the free market
    to take its course now, it would almost certainly lead to disorderly
    bankruptcy and liquidation for the automakers. Under ordinary economic
    circumstances, I would say this is the price that failed companies must
    pay, and I would not favor intervening to prevent automakers from going
    out of business.
        But these are not ordinary circumstances. In the midst of a
    financial crisis and a recession, allowing the U.S. auto industry to
    collapse is not a responsible course of action. The question is how we
    can best give it a chance to succeed. Some argue the wisest path is to
    allow the auto companies to reorganize through chapter 11 provisions of
    our bankruptcy laws and provide a Federal loan to keep them operating
    while they try to restructure. But given the current state of the auto
    industry, my economic advisers believe that bankruptcy could now lead to
    its disorderly collapse, sending our economy into a deeper and longer
    recession.
        A more responsible option is to give auto companies an incentive to
    restructure outside of bankruptcy and a brief window in which to do it.
    My administration proposed legislation to achieve this, but Congress was
    unable to get a bill to my desk before adjourning for the year. This
    means the only way to stave off a collapse of the auto industry is for
    the executive branch to step in. So yesterday I announced that the
    Federal Government will grant loans to auto companies, which will
    provide help to them in two ways.
        First, the loans will give automakers 3 months to put in place plans
    to restructure into viable companies, which we believe they are capable
    of doing. Second, if restructuring cannot be accomplished outside of
    bankruptcy, the loans will provide time for companies to make the legal
    and financial preparations necessary for an orderly chapter 11 process
    that offers a better prospect of long-term success.
        The terms of the loans will require the auto companies to
    demonstrate how they would become viable. They must pay back all their
    loans to the Government and show that their firms can earn a profit and
    achieve a positive net worth. This restructuring will require meaningful
    concessions from all involved in the auto industry: management, labor
    unions, creditors, bondholders, dealers, and suppliers. If a company
    fails to come up with a viable plan by March 31, it will be required to
    repay its Federal loans. Taken together, these conditions send a clear
    message to everyone involved in American automakers: The time to make
    the hard decisions to become viable is now, or the only option will be
    bankruptcy.
        The actions I'm taking represent a step that we all wish were not
    necessary. But given the situation, it is the most effective

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    and responsible way to address this challenge facing our Nation. By
    giving the auto companies a chance to restructure, we will shield the
    American people from a harsh economic blow at a vulnerable time. And we
    will give American workers an opportunity to show the world once again
    that they can meet challenges with ingenuity and determination and
    emerge stronger than before.
        Thank you for listening.

    Note: The address was recorded at 12 p.m. on December 19 in the Cabinet
    Room at the White House for broadcast at 10:06 a.m. on December 20. The
    transcript was made available by the Office of the Press Secretary on
    December 19, but was embargoed for release until the broadcast. The
    Office of the Press Secretary also released a Spanish language
    transcript of this address.