Oct. 27 (Bloomberg) -- U.S. automakers' financing units may qualify for financial aid under the $700 billion financial rescue package enacted Oct. 3, the Bush administration said.
A White House spokeswoman, Dana Perino, declined to comment on whether other assistance might be available to help General Motors Corp., the largest U.S. automaker, and Cerberus Capital Management LP's Chrysler LLC, complete a merger. On this subject, she referred questions to the Treasury Department.
``Automakers do have financing arms, many of them do, and it's possible that some of those financing arms could be a part of the rescue package,'' Perino said at a White House briefing.
Lawmakers have already established the auto companies may be eligible for money under the financial-rescue plan.
House Financial Services Committee Chairman Barney Frank said during a debate on the House floor on Oct. 3 ahead of the plan's final passage that the measure gives the Treasury secretary authority to buy troubled assets, such as car loans, from automakers. Frank, a Massachusetts Democrat, also told Michigan Representative John Dingell that the Treasury plan could also be used to help car companies issue consumer loans.
Ford Credit, GMAC
``We are waiting for the Federal Reserve and regulators to determine the qualifying criteria for this legislation before we know if any of our assets qualify,'' Brenda Hines, a Ford Motor Credit Co. spokeswoman, said today in an interview.
GMAC, 49 percent owned by GM, is seeking government assistance through the bailout plan, Toni Simonetti, a spokeswoman, said yesterday. ``I would call this exploratory,'' she said. Gina Proia, another spokeswoman declined to comment today after the White House announcement.
A Chrysler Financial spokeswoman, Amber Gowen, declined to comment on whether the company had applied for funding.
Treasury Secretary Henry Paulson would prefer any funding for a GM-Chrysler merger come from the $25 billion in low- interest loans approved last month for the auto industry to build more-efficient vehicles, not the $700 billion banking- system rescue, said two people familiar with the matter, who asked not to be identified because the talks are private.
GM executives have asked the Treasury Department to consider taking a stake in the Detroit-based company, a person familiar with the situation said.
Federal aid may boost cash for money-losing GM and Chrysler while they await merger savings that analysts have said may take months to realize. The U.S. auto market may shrink this year to the smallest since 1993 as the credit crunch and a slowing economy crimp demand.
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com