(Adds quotes from letter, background on state of industry)
DETROIT, Oct 30 (Reuters) - The governors of six states
urged the U.S. Treasury and the Federal Reserve to take
"immediate action" to prevent a deepening crisis for the auto
industry that would become "an unmanageable disaster" for state
governments, in a letter released on Thursday.
"While all sectors of the economy are experiencing
difficult times, the automotive industry is particularly
challenged," the letter said. "As a result, the financial
well-being of other major industries and millions of American
citizens are at risk. Immediate action is needed to address
this crisis."
The letter to Treasury Secretary Henry Paulson and Fed
Chairman Ben Bernanke was signed by Michigan Gov. Jennifer
Granholm and the governors of New York, Ohio, Kentucky,
Delaware and South Dakota.
A copy of the letter was released by Granholm's office.
The letter comes at a time when General Motors Corp has
been lobbying for up to $10 billion in government support to
allow it to move forward with a deal to acquire Chrysler LLC
from Cerberus Capital Management, according to people with
knowledge of those private talks.
All three U.S. automakers, including Ford Motor Co, have
faced increased scrutiny over their cash positions by creditors
and investors who have questioned whether they have the
liquidity that they need to ride out a slump in U.S. auto sales
seen continuing through 2009.
U.S. auto sales dropped 27 percent from a year earlier in
September. In their letter, the governors said industry sales
could drop more than 30 percent in October to the lowest level
since 1983.
"The auto industry; their network of suppliers, vendors,
dealers and other businesses and the communities that rely on
those businesses face unimaginable challenges -- challenges we
urge you to address," the letter said.
Without federal assistance, the pressure from increased
unemployment claims and diminished tax revenue from the
"economic crisis" facing automakers "threatens to create an
unmanageable disaster at the state level," the letter said.
In addition to Granholm, the letter was signed by Kentucky
Gov. Steve Beshear, Ohio Gov. Ted Strickland, South Dakota Gov.
Mike Rounds, New York Gov. David Paterson and Delaware Gov.
Ruth Ann Minner.
Rounds is a Republican. The other five governors are
Democrats.
(Reporting by Kevin Krolicki; Editing by Phil Berlowitz)
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