Reports on the White House administration and members of Congress have suggested that the Treasury Department is nearing a decision to provide assistance to at least two of the Big Three U.S. automakers. Although no official word has come from Treasury or the White House, a recent question and answer session with White House Press Secretary Dana Perino suggested that she did not “know of an imminent announcement coming from” the administration, but that the White House was “moving as quickly as possible” and acknowledged that there is not a lot of time to “prevent a disorderly bankruptcy situation with these companies.”
Yesterday, Barney Frank, Chairman of the House Financial Services Committee, sent a letter to Secretary Paulson, urging him “to adopt accountability protections identical to those contained in H.R. 7321 [the auto legislation passed by the House last week but failed in the Senate]” as terms or conditions on any potential aid to the automakers through TARP funds. He stated in the letter that “strong provisions to protect taxpayers and ensure that the companies engage in the kind of fundamental restructuring necessary for their long-run viability and success” would ensure that the companies stayed focused on restructuring. This letter closely resembled comments contained in a letter sent by House Speaker Nancy Pelosi to the President last week.
Treasury’s Initial Section 105(a) Troubled Asset Relief Program Report to Congress, released on December 5, 2008, indicated that Treasury had allocated approximately $335 billion in funds under the TARP. This would leave only $15 billion in TARP funds for the auto industry—unless Treasury submitted a plan to Congress for the second $350 billion of the $700 billion authorized under the Emergency Economic Stabilization Act of 2008.