2 a (1): to be under obligation to pay or repay in return for something received : be indebted in the sum of <owes me $5> (2): to be under obligation to render (as duty or service) <I owe you a favor> b: to be indebted to <owes the grocer for supplies>

2: to be attributable <an idea that owes to Greek philosophy>— owe it: to have a responsibility to do something to satisfy an obligation or duty <owes it to voters to explain his reasons>

By Matt Spetalnick Matt Spetalnick

Sat Dec 13, 1:09 pm ET

WASHINGTON (Reuters) – The Bush administration said on Friday it could be willing to provide emergency aid to the teetering U.S. auto industry, keeping open the prospects for a bailout the day after Congress failed to approve a deal.

Warning of dire consequences for the recession-hit U.S. economy if the once-mighty automakers collapsed, the White House -- in a reversal of policy -- said it was ready to consider dipping into a $700 billion Wall Street bailout fund to help keep the companies afloat.

"The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry," White House spokeswoman Dana Perino said.

Democratic leaders and the main U.S. auto workers union appealed to Bush's Republican administration -- now in its final weeks before turning over to Democratic President-elect Barack Obama -- to provide emergency funds after a Senate deal to save Detroit's Big Three collapsed in acrimony late on Thursday.

The failure of the $14 billion bailout plan in Congress sent markets reeling around the world. Shares in Toyota Motor Corp, the world's biggest carmaker, lost a tenth of their value, and European automakers also closed sharply lower.

But signs that the White House and U.S. Treasury Department might mount a last-ditch effort to help the carmakers buoyed Wall Street.

Analysts say that without quick help, two of the country's major car manufacturers -- General Motors Corp and Chrysler LLC -- could face bankruptcy. Ford is in slightly    better     financial    shape

but says it needs a major line of credit. The auto companies say one in 10 jobs in the United States are linked to their industry.

But the companies are widely criticized for fighting tougher fuel efficiency standards and poor model designs that have left them with products losing popularity with consumers.

Responding to the congressional impasse, the administration said it was considering tapping the Troubled Asset Relief Program (TARP) financial industry fund, whose use for an auto bailout it had earlier vowed to oppose.

Even if GM and Chrysler secure a last-ditch loan from the Bush administration, analysts see continued uncertainty ahead. Both will be under intense pressure to cut new cost-saving deals with creditors and the main labor union at a time when U.S. auto sales are at their lowest level adjusted for population since World War Two.

A General Motors bankruptcy would deliver a huge punch to the economy and to the labor market.

"It would significantly intensify the recession, it would make it deeper and it could also prolong it," said Ward McCarthy, managing director at Stone & McCarthy Research Associates in Princeton, New Jersey.

The Senate's rejection was also felt by suppliers. Finnish tire maker Nokian and Swedish airbag and seatbelt maker Autoliv cut their earnings guidance, and a source told Reuters parts manufacturer Continental might have to restructure its debt if the economy worsened.