US Treasury Dept.: TARP Can Buy Auto Cos.' Debt, Equity
01 Mai 2009 - 6:26PM
Dow Jones News
The U.S. government's $700 billion bailout fund can be used to
purchase debt and equity from domestic auto makers, U.S. Treasury
Secretary Timothy Geithner told congressional leaders this
week.
In letters dated Wednesday to the chairmen of several key
committees, Geithner said he and U.S. Federal Reserve Chairman Ben
Bernanke have determined that the purchase of auto makers' debt is
"necessary to promote financial market stability."
Moreover, Geithner said he and Bernanke have concluded the debt
qualifies as a "troubled asset," making it eligible for purchase
through the bailout fund. The fund was originally created as a way
to cleanse bank balance sheets of risky mortgage-related assets
that have constrained their lending ability.
Geithner said certain companies involved in the auto
manufacturing sector already have asked the Treasury Dept. purchase
debt obligations or equity. However, he declined to provide names
or further details.
Treasury spokeswoman Jenni Engebretson did not immediately
respond to a request for additional information.
The Treasury Dept. already has provided nearly $25 billion in
loans to General Motors (GM), GMAC LLC, Chrysler LLC and Chrysler
Financial, aiming to keep the struggling auto makers out of
bankruptcy court. It also has provided $5 billion in aid to auto
suppliers and received $5 billion in preferred stock from GMAC.
Still, Chrysler on Thursday filed for Chapter 11 bankruptcy
protection after lenders rejected a deal to cut the company's debt
and keep the Detroit icon out of court.
-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629;
meena.thiruvengadam@dowjones.com