The federal government will make billions of dollars worth of loans available to U.S. automakers to enable them to restructure and invest in fuel-efficient auto technologies like electric vehicles.
At a press briefing on Friday, President Bush announced the outlines of the plan which he said was meant to avoid a "disorderly bankruptcy."
Auto companies will have access to $13.4 billion from the $700 billion that was authorized to shore up the country's financial institutions. Another $4 billion would become available for the carmakers in February. The companies have until March 31 to demonstrate that they have plans to be "viable companies" or the loans will be called back.
The deal also requires the automakers to give the government loans priority over other creditors, limits on executive pay and elimination of perks like corporate jets.
Bush said that the terms of the loans will be similar to the ones that Congress nearly passed last week. At the last moment, a disagreement over the timetable for bringing U.S. workers wages in line with foreign competitors.
Because Congress failed to pass that measure, Bush said the executive branch has stepped in and tapped the funds available in the Troubled Asset Relief Program (TARP). He said that all parties--auto companies, unions, creditors, and suppliers--will need to make significant concessions.
"Given the situation, it is the most effective and responsible way to address this challenge facing the nation," Bush said. "We will shield the American people from a harsh economic blow at a vulnerable time and give American workers an opportunity to show the world once again that they can meet challenges with ingenuity and determination."
General Motors and Chrysler are expected to take out the loans because they are considered financially vulnerable and said to be close to running out of cash.
With the cash lifeline, these companies should be able to pursue the business plans they presented to Congress to regain financial footing.
Their product plans calls for investments in fuel-efficient vehicles, including electric powertrains. The Big 3 have all announced plans to make gas-electric cars which will bring a jump in fuel efficiency.
On Wednesday, General Motors said that it hasof a new plant to manufacture an engine for the Chevy Volt and Cruze, another highly touted fuel-efficient car. A company representative said that plans were on hold temporarily because GM is cutting back expenses.
In a statement, Chrysler CEO Bob Nardelli said that the company is committed to "meeting these requirements."
Material from CBSNews.com was used in this report.