Carmakers 'affect entire economy'

GM year-on-year sales fell 41% in November

The chairman of the Senate committee deciding whether to rescue the Detroit Three carmakers has said the health of the entire US economy is at stake.

Democrat Christopher Dodd said that letting Chrysler, General Motors or Ford fail would be playing "Russian roulette with the entire economy".

Failure would affect "almost every sector of the economy", he said.

He also severely criticised the US Treasury and financial institutions for their handling of the credit crisis.

"This is not about acting to save individual companies. If it were, I would let them fail," said Sen Dodd, who chairs the Senate Banking Committee.

With "hundreds of billions in outstanding debt obligations", he said the credit crisis would get a lot worse if the carmakers were not able to repay their debts.

Inaction, he said, "is simply not a solution."

Rounding off his opening salvo, the senator said the US was mired in a deep recession caused by "irresponsible actions in the financial sector", before criticising the Treasury Department for "misusing" its authority by spending the $700bn bail-out package agreed by Congress in an "ad hoc manner".

The authorities had not, he said, attached stringent enough conditions to the package.

Loan proposals

Earlier this week, Chrysler, Ford and General Motors submitted their proposals to Congress for multi-billion-dollar loans upon which their survival could depend.

The so-called Detroit Three of troubled US carmakers have asked for a combined total of $34bn (