Bush approves huge loan package for auto makers

WASHINGTON (Reuters) - President George W. Bush on Tuesday signed into law a mammoth spending bill to keep the government running until early March 2009 that includes a $25 billion loan package for troubled automakers.

The action came after the Senate over the weekend gave final congressional approval to the more than $630 billion (353 billion pound) spending bill that was needed to finance defence, education, farm, health, foreign aid and other government programs after the current fiscal year expired on September 30.

The spending legislation allows a ban on offshore drilling to expire on September 30. Democrats had hoped to extend the ban, but did not have the votes to overcome strong opposition from Republicans.

Bush, in a statement announcing that he had signed the legislation, said the measures to lift the ban on offshore drilling "will allow us to reduce our dependence on foreign oil."

The bill sets aside $7.5 billion in taxpayer funds needed to guarantee $25 billion in low-interest loans to help General Motors Corp, Ford Motor Co and Chrysler LLC produce more fuel-efficient cars and trucks.

U.S. automakers have said the taxpayer-backed loan package

would give them access to capital at a time when credit markets are shut and they are being driven to invest in new technologies to meet tough new federal fuel economy standards.

The $25 billion loan package, the biggest federal subsidy for the auto industry since the 1980 bailout of Chrysler, cleared Congress last weekend when the focus was on the debate over the $700 billion financial rescue package.

GM, Ford and Chrylser had said they could manage without the federal loans but also suggested that without the federal subsidy thousands more industry jobs could be at risk.