Treasury Cuts First Checks to GM, Chrysler, Asks For More Money
In an update just released by Treasury on the $700 billion bailout/rescue plan (the TARP), the department said it has made its first multi-billion-dollar loans to troubled automakers GM and Chrysler, part of the government's $19.4 billion in emergency bridge loans to Detroit.
So far, $350 billion of the $700 billion approved has been spent. In the concluding line of the report, Treasury says it will ask Congress for the next $350 billion: "Treasury believes . . . that the remainder of the TARP funds will be needed to support financial market stability."
Treasury cut a $4 billion check to GM on Dec. 31 and wrote a $4 billion check to Chrysler on Jan. 2.
GM gets another $5.4 billion on Jan. 16 and could get another $4 billion on Feb. 17 if the automaker has written a restructuring plan that then-President Obama deems viable.
Treasury also spent $5 billion on Dec. 29 for senior preferred equity on GMAC, the auto financing business co-owned by GM and Cerberus Capital, which owns Chrysler. Treasury also will loan GM $1 billion to help convert GMAC into a bank-holding company so it will be eligible for more government bailout money.
Also in the report, Treasury says it has infused capital into banks in 40 states and Puerto Rico.
"Treasury’s investment in GM, GMAC, and Chrysler prevented significant disruption to the economy, while putting the companies on a path to the major restructuring necessary to achieve long-term viability," the report says.
January 8, 2009; 10:55 AM ET
Categories: The Ticker | Tags: Chrysler, GM, GMAC, Treasury
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