The government will offer up to $17.4 billion in loans to the ailing U.S. automakers and expects General Motors and Chrysler LLC to access the money immediately.
Chrysler will get $4 billion this month. GM would get $4 billion initially and another $5.4 billion on Jan. 16. Another $4 billion available to GM on Feb. 17 would be subject to Congressional action.
Allowing the companies to fail "would not be a responsible course of action," Bush said in a broadcast message from the White House.
Bush said conditions on the aid will be similar to those in the legislation that failed Congress last week, including concessions from management, labor, bondholders and others.
The companies will have until March 31 to produce plans that prove they will be viable for the long term, including being competitive with import-brand plants in the United States.
The loans would require limits on executive compensation and other perks, and the automakers would also have to provide warrants for nonvoting stocks.
Bush said he had accepted the industry argument that consumers will not buy vehicles from companies in bankruptcy.
"If you hear that a car company is suddenly going into bankruptcy, you worry that parts and servicing will not be available, and you question the value of your warranty,'' he said.
White House intervention became necessary after Congress last week rejected legislation to provide $14 billion in loans -- with the promise of more aid to come next year.
The money will come from the $700 billion fund that was originally designed to rescue struggling financial institutions,
The funding is split because the initial $13.4 billion is available from the first $350 billion of Troubled Asset Relief Program funding already available. The rest would await congressional approval for the second $350 billion of TARP funds to be released.
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GM and Chrysler have warned they could run out of cash within weeks as U.S. auto sales drop to levels not seen since the early 1980s.
Ford Motor Co. said it does not face a similar crisis but wants access to a federal line of credit in case market conditions worsen or one of its rivals fails.
The Detroit 3 CEOs told Congress in hearings Dec. 4 and 5 that they need at least $34 billion from the federal government to weather the economic downturn.
