Updated: 1:36 p.m.
A day after Senate Republicans thwarted passage of an auto industry rescue package, the White House on Friday signaled a new willingness to use funds from the $700 billion financial sector bailout to keep the nations car manufacturers from going bankrupt.
Given the current weakened state of the U.S. economy, we will consider other options if necessary including use of the TARP program to prevent a collapse of troubled automakers, White House spokeswoman Dana Perino said in a statement.
A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.
The announcement reflects a concession by the White House, which until now flatly refused to use Wall Street bailout funds for automakers and instead called for tapping a separate pool of money set aside for cleaner car technology.
Senate talks on the auto package collapsed late Thursday after a marathon bipartisan negotiating session ended in a stalemate over union benefits. After the vote, both Republicans and Democrats predicted that administration officials would be compelled to turn to financial sector bailout.
House Democratic leaders, who rushed the bill through on Wednesday, ripped Senate Republicans for killing the package.
Speaker Nancy Pelosi (D-Calif.) said Bush made the right decision to consider tapping the Wall Street bailout to aid auto manufacturers, a step she described as the only viable option available at this time.
In a letter sent Friday afternoon, Pelosi urged President Bush to include the same accountability provisions and timelines passed in the auto bill that cleared the House on Wednesday.
The strong taxpayer protections and tough conditions contained in the House-passed package should apply to any assistance provided to the automakers by your administration, the letter states.
Even some House Republicans, who largely opposed the bill, blasted their Senate counterparts for refusing to compromise.
Senate Democrats did everything they could, but no one can reason with unreasonable people, House Republican Policy Committee Chairman Thaddeus McCotter (Mich.) said.
McCotter called on the president to immediately release funds from the Wall Street bailout to automakers to avoid their impending bankruptcy and its consequent devastation of working families and the depression of our American economy.