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Automakers want to double government loan

  |   Oct. 27, 2008 at 3:26 PM
DETROIT, Oct. 27 (UPI) -- Policy makers are weighing the importance of the U.S. auto industry to the nation's economy in debating a new government loan for troubled carmakers.

Michigan Gov. Jennifer Granholm is seeking support for a second $25 billion loan to U.S. automakers, having met with industry leaders last week to discuss the implication of having one of Detroit's Big Three go under, The Detroit News reported Monday.

"The auto industry clearly is extremely important to the economy and now has enormous difficulties. I think we do need to ... see if there are ways that public policy can be helpful," former Treasury Secretary Robert Rubin said on a CBS "Face the Nation" interview on Sunday.

Sen. Barack Obama has said he favors increasing the loan to $50 billion, while Sen. John McCain, in an interview on NBC's "Meet the Press," advocated waiting. "Let's get the first $25 billion to them first," he said.

Sources said government intervention may be necessary to allow General Motors to complete a deal to purchase Chrysler, LLC. GM, burning up its cash reserves quickly while sales plummet, would be faced with a $10 billion debt that would come due if Chrysler changes hands, the News reported.

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