TARP Program To Save General Motors and Chrysler
As expected, the government is exhausting all means to extend financial aid towards the embattled car manufacturing giants of Detroit, General Motors and Chrysler. While the first auto bailout plan did not pass the grade for refusal of the labor unions to take a significant salary adjustment that can be compared with the salary structure of Japan’s own line of car manufacturers, the new auto bailout plan hopes to put all these to rest and save the two car manufacturing giants from officially filing chapter 11 or bankruptcy
The alternative? The Troubled Asset Relief Program or TARP. The TARP is actually the $700 billion bailout approved by Congress in October.
The Bush administration said Friday it might use taxpayer dollars set aside to bail out banks and Wall Street firms to keep troubled U.S. automakers out of bankruptcy.
The move could provide an 11th-hour short-term lifeline to General Motors and Chrysler LLC, which have warned they are within weeks of running out of the cash they need to continue to operate.
With this development, the government is reversing the initial round of talks where the Senate all but killed the initial funding for the auto bailout plan which has amounted to $14 billion. Will this resolve the problem the U.S. economy is facing? Everyone is hoping that it does while some sectors are holding out other opinions.
Republican critics of a bailout have argued that the automakers should use bankruptcy to shed debt and onerous labor obligations. They point to the success of companies in other troubled industries, such as airlines and steelmaking, to use bankruptcy to reorganize.
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