Auto Bailout Stalls, So Bush Steps In

Efforts to create an relief package for the Big Three automakers stalled Thursday night in the Senate as legislators locked horns over union pay. Basically, Republicans wanted any company involved in the bailout to cut labor costs and reach parity with foreign companies like Toyota and Honda that also produce cars on American soil. Democrats resisted, and as a result failed to get the necessary votes to end debate on the bill.

But today, President Bush reversed course and decided to allow TARP funds from the bank bailout to tide over the automakers. The market cheered the results, and steered upwards now that it looks like the prospects of a GM bankruptcy are unlikely. However, unlike the legislation being debated, it's extremely unclear what conditions would be imposed on any loans made to the automakers from TARP.

This is only the first chapter in the bailout of automakers. The legislation that failed to move through Congress was only delaying a comprehensive rescue package until March, and it looks like the TARP money might only be a stopgap until the new Congress takes office Jan. 6. But for now, at least the uncertainty has been deferred and GM will live to see another day.