US May Tap TARP To Save Car Firms

SKY NEWS
Friday, December 12, 2008

The White House will consider tapping a $700bn financial rescue fund to bail out the US car industry after the Senate rejected a bill aimed specifically at saving the sector.

A spokeswoman said the administration would look at using the Troubled Asset Relief Program to tackle the problem because of the threat it posed to the economy as a whole.

Dana Perino said: “Given the current weakened state of the US economy, we will consider other options if necessary – including use of the TARP program – to prevent a collapse of troubled automakers.”

(ARTICLE CONTINUES BELOW)

Her comments came after the US Senate voted against a $14bn package to rescue the industry following Republican demands that the car workers’ union agree to wage cuts.

Ms Perino declined to say when a decision on using the fund would be made, but said the White House understood “the urgency of the situation”.

• A d v e r t i s e m e n t

“While the federal government may need to step in to prevent an immediate failure, the auto companies, their labour unions and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable,” Ms Perino warned.

Reports in the US say General Motors has appointed bankruptcy lawyers and restructuring specialists as concerns grow over its survival.

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