Guidelines Determined for Auto Bailout Plan
The U.S. Treasury has clarified guidelines for its auto industry rescue plan. The treasury says that there is a possibility to invest in debt, warrants or equity that would be determined as troubled assets of some automaker company.
According to the treasury, these guidelines for Auto Industry Financing Program will be applied to all those auto firms that it will reckon important for the industry including Detroit automakers and other auto finance companies.
Under these guidelines, a proper structure has been offered to a $17.4b rescue plan for GM and Chrysler LLC that was rushed into effect by the Bush administration on Dec.19. The plan was supplemented with $6b for finance companies aid later on.
“It is expected that General Motor will receive the first installment of $4b quite soon,” says Greg Martin, a GM spokesman.
In the beginning, the Troubled Asset Relief Program was devised as an auction system which allowed banks to offer assets related to mortgage to the Treasury and freed their balance sheets foe further lending. However, the course was quickly reversed by the Treasury as to put capital in the banks directly.
The Treasury explained that it would verify the eligibility of some automaker for this program partially.