General Motors has been staying afloat all this time because of financial backing from the federal government until it ultimately needed to file for a bankruptcy last week.

Cheney revealed the matter during an interview with Fox News and said that Bush just did not want to pull the plug on the automaker which has been one of the pillars of the U.S. car industry.

According to him the government knew about the struggle of GM and has foreseen that eventually the carmaker will need to go through bankruptcy and some restructuring and renegotiate their contracts in order to survive.

The former second in command disclosed that the Bush administration worked on putting a package so it can keep its head above the water until the new administration takes over. The plan included the original bailout fund of $17.4 billion which gave Barack Obama’s team to have some buffer before addressing the issue and the eventual bankruptcy of General Motors.

The new GM will be re-emerging in about three months with the government of the United States having a 60.8% stake. The car manufacturer will be facing a multi-billion consolidated debt but is in shallower waters compared to the liabilities if they have not declared chapter 11.

“Everybody, from labor to management to creditors to shareholders, giving something up,” stressed Obama. He thinks that shared sacrifice among every industry including the car industry would have to be considered.

Ironic as it may sound, Obama has his own reasons. Automakers would have to wait and see what happens because this may mean that tougher conditions on federal loans will be imposed in his administration. To backtrack in Bush’s administration, he allowed automakers to get a specific loan so that they can keep up in spite of the recession. These loans had strict conditions that involved time tables as well.

GM and Chrysler was able to file a loan. Former President Bush approved a staggering $17.4 billion while the GMAC Financial Services offered $6 billion on top of it. With these loans, the manufacturers were required to present a financial plan that will encompass the days between the start to the 17th of February.

Obama isn’t providing a solution to the overwhelming financial crisis in US. What he’s providing is a call to help one another. Quite a charismatic approach right there. This may work with the public but we never know with the business tycoons. After all, all he can do is to really call for unified effort.

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Sources say that the federal funds will be used to provide loan grants to automotive suppliers, auto finance companies and automakers.

The first $350 billion funds were released to fund emergency loans to automotive companies such as Chrysler LLC an General Motors.

The second round of $350 billion was released after aids to new President Barack Obama ensured that the funds will strictly be controlled, insiders say.

Obama designee National Economic Council Chairman, Larry Summers, said in a letter that the second $350 billion funds will not be allocated to industrial policies. He also said that the automobile companies will only receive the additional aid provided that they have a concrete reconstruction for long-term viability.

The releasing of the second bailout funds was met with uncertainty as criticism of how the Bush administration handled the first $350 billion arose. Reports have said that the first funds were used in bank investments instead.

Part of the second federal funding is set to be used for a loan to Ford Motor Corporation. Although the pioneering automobile company has yet to ask for an immediately loan, it has already expressed interest in a $9 billion loan should the market conditions prove to be worse.

Obama, citing that the first release of funds lack transparency and accountability, said in a statement that he will provide loans instead to small businesses. He said that to keep the faith of American tax payers, it is necessary that they see where their taxes go.

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During a recent speech engagement in front of the joint session of the U.S. Congress, President Barack Obama holds accountable the car manufacturers for their bad practices that pushed them to the brink while fighting the current recession.

The US President promised though to help them regain their grounds to be able to compete again and win the auto industry. Obama also pinpointed the millions of jobs depending on car manufacturing.

The Obama led government is taking actions to help revive the ailing car industry. The US President backed up the plans of former president George W. Bush in pushing for the emergency loans amounting to $17.4 billion to GM and Chrysler LLC.

The federal government has activated several taskforce to study the restructuring plans of the car manufacturers which are asking for an additional loan of $21.6 billion. They are also looking into the call for help coming from suppliers amounting to $18.5 billion.

During this first appearance before the Congress, Obama presents the focus of his budget. The president explained that the government cannot attempt to solve every problem but would rather deal on the most critical issues on health care, energy, and education.

Obama foresees renewable energy as the dictating force of the future. He looks at China as one of the current stalwarts to make their economy energy efficient. The 44th US president also cites the US as the front runner of solar energy but is now falling behind Japan and Germany. He also mentioned hybrid vehicles made by Americans but running on Korean-made batteries.

The speech of the president paints the picture of reality and at the same time re-enkindles hope for everyone including the auto manufacturing industry.