Momentum is building in Washington to aid wounded US automakers with cash to help their finance arms and possibly even money to help seal a deal for General Motors Corp to acquire Chrysler LLC.
The US Department of Energy is trying to free up US$5 billion of a US$25 billion federal loan package to help make the GM-Chrysler deal work, the Wall Street Journal reported on its Web site on Monday.
And the White House said on Monday that the financing arms of the automakers might be eligible for federal help under the bank stock-purchasing portion of the US$700 billion financial rescue package.
Officials “at the highest levels” of the Treasury, Energy and Commerce departments have talked to top automaker executives on the topic, presidential spokeswoman Dana Perino said.
“It’s a possibility that they could qualify under it,” she said.
It would be up to US Treasury to determine whether any of the automaker financing arms could qualify, she said.
GMAC Financial Services, Chrysler Financial and Ford Motor Credit Co all could be eligible for help.
Also, Perino said that administration is “working as quickly as we possibly can” to finalize the regulations necessary to release the US$25 billion in congressionally approved loans to automakers, designed to develop new energy efficient technology but is seen as a way to help keep the companies afloat amid hard times.
She wouldn’t put a specific time frame on it.
She also wouldn’t rule in or out any further federal aid, beyond the loans, to stave off bankruptcy by any of the US automakers.
All three automakers are burning up cash as the US auto market downturn continues with no end in sight.
Analysts say GM and Ford are spending more than US$1 billion per month more than they bring in, while Chrysler’s figures are unknown because it’s a private company.
Analysts say GM could reach its minimum operating cash level of US$14 billion sometime next year. GM’s sales are down 18 percent, and the company has lost US$57.5 billion in the past 18 months, although much of that comes from non-cash tax accounting changes.
The government has an interest in making sure automakers survive because of huge pension plans that it would have to insure, and the huge number of jobs that could go away if one of the companies goes bankrupt.
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