The Treasury Department will pump up to $5 billion in financing into troubled auto parts suppliers to prevent an auto industry collapse that could undermine the US government's work to restructure General Motors and Chrysler.
The funds, announced Thursday, will be made available from the government's Troubled Assets Relief Program, or TARP, in a financial entity similar to a revolving credit. Large suppliers would be eligible for financing auto parts they have shipped to the carmakers but have not yet received payment.
US automakers - General Motors Corp., Chrysler LLC and Ford Motor Co. - will have the option of using the program and designate the companies that need financing, giving them a large role in determining which parts suppliers will survive.
GM and Chrysler, which have received $17.4 billion in government loans, said they would use the program. Ford, which has not sought the government aid, said in a statement it would not participate "as we remain viable and expect no issue with continued payments to our suppliers."