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WASHINGTON – With Congress gridlocked and the economy floundering, the Bush administration declared Friday it would step in to prevent the "precipitous collapse" of the U.S. auto industry and the disastrous loss of hundreds of thousands of jobs sure to follow.

By DAVID ESPO, AP Special Correspondent David Espo, Ap Special Correspondent – 17 mins ago

Corvette Plant

A day after the sudden demise of rescue legislation in Congress, carmakers were talking with the administration and the Federal Reserve about how they could still get the billions of dollars they say they need to survive. The talks included conditions that automakers would have to meet, said GM spokesman Greg Martin.

The administration said no decisions had been made on the size or duration of the new bailout plan, or what type of concessions might be demanded from the struggling automakers, their workers, stockholders or others.

In a reversal, the most likely rescue option under consideration involved billions of dollars originally ticketed for the bailout of the financial industry. President George W. Bush had earlier declared that money off-limits to the beleaguered automakers.

General Motors Corp. and Chrysler LLC have warned they are running out of cash and face bankruptcy without some form of assistance. Ford Motor Co., which is in somewhat better shape financially, has been seeking access to a line of credit.

Underlining its difficulties, GM announced Friday it would cut another 250,000 vehicles from its first-quarter production schedule — a third of its normal output — by temporarily closing 21 factories across North America. The move affects most plants in the U.S., Canada and Mexico. Many will be shut the whole month of January.

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