We research, you save.
October 28th, 2008

(Update1) TARP: Troubled Automaker Relief Program?



Well not exactly. As merger talks continue between GM and Chrysler, the White House has begun to discuss federal-financing avenues for the two automakers — one option could include pulling funds from the allotted $700 billion set aside for rescuing financial institutions. The Treasury Department confirmed this week that no money would be diverted from TARP funds; that money had been designated solely for capital infusions to banks and insurance companies only.

Individuals close to the two automakers claim they have requested approximately $10 billion from the federal government to foster a merger between the two failing automakers. One breakdown sees the government providing $3 billion in exchange for preferred stock, the White House taking over $3 billion in pension obligations (extensive pension obligations for retired autoworkers have gobbled up tremendous amounts of funds from both automakers), and “a credit line that could include U.S. government purchases of commercial paper issued by GM to relieve short-term pressure on liquidity.”

The failure of just one of the “Big Three” auto manufacturers could have devastating economic effects. Combined, the Big Three employ 200,000 US workers, not to mention the millions of other jobs, like parts suppliers and dealerships, that rely on them.

Any potential federal aid that may be provided to US automakers will be in addition to the recently-approved $25 billion designed to bolster the production of more fuel-efficient vehicles. A decision could come as early as this week.

Phil LeBeau of CNBC is quite confident GM and Chrysler will get the money they are after. But that’s not the “tough sell” General Motors should be worried about. According to LeBeau, “(GM’s Chairman and CEO Rick) Wagoner’s personal push for loans is not a tough sell. He’ll get the money and once he does, then the real pressure starts. Then he and his top lieutenants will have to move quickly to integrate Chrysler.”

“Washington doesn’t have much of a choice but to give GM the money.”

Share and Enjoy:
  • email
  • Print
  • RSS
  • Add to favorites
  • Yahoo! Bookmarks
  • Facebook
  • Twitter
  • Technorati
  • Digg
  • del.icio.us
  • Google Bookmarks
  • StumbleUpon
  • Yahoo! Buzz
  • Mixx
  • BlinkList
  • Live
  • Reddit

2 Responses to “(Update1) TARP: Troubled Automaker Relief Program?”

  1. Miguel Says: November 19th, 2008 at 5:18 pm

    I just signed and mailed the electronic funds transfer form for the second loan I’ve taken out to pay my son’s college. Next fall, my daughter starts college. I also just received a notice from my health insurance that my premium is also going up, and our prescription co-pays will go from $35 to $60 for EACH prescription. My wife and I have 10 prescriptions.

    I am counting pennies right now, and these people in Congress have the NERVE to even consider giving these people who make $77 an hour, a bailout? NO. Enough. If they keep this up, maybe next time we should kick them all out. Every imcumbent. Just kick them all out, and maybe they’ll get the message.

  2. Tim Manni Says: November 20th, 2008 at 10:24 am


    Thanks for reading our blog and leaving your comment. Times are tough for so many of us out there, and there seems no end in sight. I know many people, including myself, that have taken on a second job to help pay the bills.

    Lawmakers are treading a fine line between an economic backlash (if the Big Three should fail) and funneling money into a poorly managed industry. The US auto industry is well behind many foreign automakers in efficiency and technology. You’re absolutely right — something drastic needs to be done, and soon!

    Thanks again for reading and we hope to hear from you soon,


Leave a Comment

Receive Updates via Email

Delivered by FeedBurner

About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

Connect With Us

  • rss feed icon
  • facebook icon
  • twitter icon

Compare Lowest Mortgage Rates