The White House said Friday it is considering using part of the $700 billion Wall Street rescue fund to prevent the domestic auto industry from failing.
Dana Perino, a spokeswoman for President Bush, said it would be "irresponsible" to further weaken the economy by letting Detroit's Big Three automakers fail. Perino said the White House normally would prefer to let the financial markets determine the companies' fate.
But she said that given the economy's shape, the White House will consider other options if necessary to prevent the automakers' collapse — and that could mean using money from the $700 billion Wall Street rescue.
Perino made the remarks as Bush flew to Texas for a commencement speech, just hours after a deal on $14 billion in aid to automakers collapsed. The deal fell apart Thursday night in the Senate despite intense negotiations on Capitol Hill between lawmakers, union officials and representatives from the three companies.
"It's disappointing that Congress failed to act tonight," Deputy Press Secretary Tony Fratto said in a statement Thursday. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."
The bailout died after failing 52-35 on a Senate procedural vote.