The U.S. Senate voted Thursday to release to the second round of $350 billion allocated for TARP, the Troubled Asset Relief Program. The Bush administration had promised that GM would receive the last $4 billion installment of its $13.4 billion federal loan if and when the second round of TARP funds was released. The only way the incoming Obama administration was able to convince the Senate to release the funds, however, was by promising that it will tightly control the way the funds are used.
In a letter issued today, Obama's chairman of the National Economic Council, Larry Summers, said the new money will not be used to pursue industrial policy. Referring to auto companies, Summers said they "will only receive additional assistance in the context of a comprehensive restructuring design to achieve long-term viability."
GM's Rick Wagoner said earlier this week that GM will consider whether it needs to pursue additional government aid. In addition to the $9.4 billion it received directly from TARP, its financial arm, GMAC, received an additional $6 billion from the program. Chrysler has said that it still needs an additional $3 billion. Ford's $9 billion line-of-credit would also likely come from this installment of TARP.
The Senate voted 52-42 in favor of releasing the 2nd round of bailout money. A vote by the House of Representatives is not needed under procedures set for handling the money, but the House is considering a separate bill that would alter the restrictions the Bush administration placed on the TARP money given to GM and Chrysler. The new bill could tie the loans to UAW concessions.
Source: Automotive News