Gov. Granholm on auto industry bailout

MICHIGAN (NEWSCHANNEL 3) - One of the biggest supporters of an auto industry bailout has been Michigan Governor Jennifer Granholm.

Granholm is a member of President-elect Barack Obama's economic transition team and has been named as a possible energy secretary or auto czar in the Obama administration.

On Thursday, Granholm was focused on the bailout at a round-table in Lansing.

Governor Granholm compared the domestic auto industry to falling off a cliff, she says if any one of the big three go into bankruptcy, it would spell doom for the industry. Granholm is hoping the government will go well beyond the $25 billion they already promised to loan out.

Granholm says it's simply a loan to the big three, she says an extra $25 billion as part of the $700 billion financial bailout would revive an auto industry in a tailspin.

"We want to emerge from having borrowed in a better position," Governor Granholm said, "much better to prevent then to go off the cliff and then to pick up the pieces of the economy at the bottom of the cavern."

The Bush Administration says the bailout is for the financial industry, not the auto industry, and critics say a taxpayer bailout of the auto industry would be a terrible mistake, subsidizing perceived shoddy management practices and rewarding union bosses who've helped to cut profit margins for the manufacturers.

Granholm responded to the criticism by saying that two of the three companies have new management and all three companies have new union contracts helping them to restructure.

"Bottom line, the industry's recognized it has to change," Granholm said, "it must step on the gas, so to speak, to explain the changes, what they've done and listen to Congress what further steps they need to take."

Governor Granholm is preparing to embark on a five-day trip to the Middle East, she condensed the trip to five business days over concerns about some kind of auto industry rescue plan.

Granholm says if any of the big three go bankrupt, customers won't feel comfortable enough to spend thousands of dollars buying a vehicle from a bankrupt company, but that a bailout will put GM, Ford and Chrysler back on solid ground.

"They are confident they will be on stable footing and that they will be able to weather the storm," Granholm said, "and come out better and stronger at the end."