By Ronald D. Orol
The Obama administration's commitment of $30 billion on Monday
to General Motors Corp. (GM) as it files for bankruptcy, brings the
total amount of funds allocated and promised to the auto industry
to $110 billion, including bailout capital and funds to be made
available for green-car component suppliers.
The additional $30 billion brings the government's allocations
to General Motors to $50.7 billion, according to ProPublica, a
non-profit newsroom.
Separately, Treasury has committed $15.5 billion of the bailout
funds to Chrysler, which is owned by buyout shop Cerberus Capital
Management.
Another $14 billion has been set aside to auto-financing
companies GMAC and Chrysler Financial Services. GMAC's bailout rose
to $12.5 billion after Treasury promised it an additional $7.5
billion earlier this month.
Included in the calculation is $5 billion in funds promised to
auto suppliers in March as part of the government's Auto Suppliers
Support Program. The Treasury made $3.5 billion available to
General Motors part suppliers and provided $1.5 billion for
Chrysler auto suppliers.
Also, in 2007, Congress created a program to provide funds to
automotive companies to develop electric-powered and other advanced
technology, fuel efficient vehicles. In 2008, Congress appropriated
$7.5 billion to the Energy Department for the "Advanced Technology
Vehicles Manufacturing Loan Program," which would support as much
as $25 billion in loans for green automotive technology.
However, none of that money authorized by Congress has been
allocated yet and most of it would go to automotive equipment
manufacturers. Ford Motor Co. (F) has applied as have a wide
variety of automotive equipment manufacturers of engines and other
car industry suppliers. Funds should be allocated later this
year.
Billions in government funds through the Federal Reserve's Term
Asset-Backed Securities Loan Facility program have also been
allocated to help stimulate lending in the automotive sector.
Bailout Funds To Dry Up?
After the General Motors allocation, the government bailout
program, known as the Troubled Asset Relief Program, may soon dry
up. After the Treasury provides the additional $30 billion it
committed on June 1 in loans to GM and the additional $7.5 billion
provided to GMAC, the $700 billion bank bailout program approved in
October will have allocated $633.5 billion in funds, leaving only
$66.5 billion for remaining programs.
However, Treasury could soon have more funds available for
automotive companies and financial institutions. Some large
financial institutions are seeking to return funds they received as
part of the bank bailout funds.
Goldman Sachs (GS), J.P. Morgan Chase (JPM) and Morgan Stanley
(MS) have asked the Federal Reserve for permission to repay $45
billion in federal bailout money they received.
-Ronald D. Orol; 415-439-6400; AskNewswires@dowjones.com