Uncertainty swept through Detroit late last night when the Senate failed to pass a bailout plan for the Big Three automakers, but it looks as though all hope is not lost, after all, for Chrysler, General Motors and Ford. The Department of the Treasury announced on Friday morning that it will step in to help the Big Three.
Without immediate government funding, Chrysler and GM would be forced to file for Chapter 11 bankruptcy protection, a move that would likely spin both companies into liquidation. The Treasury Department doesn’t see this as a viable option for the U.S. economy, and has vowed to step in where Congress failed.
“Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the [auto] industry,” The Department of the Treasury said in a statement Friday morning.
The emergency funding will likely come from the $700 billion already set aside for TARP funds. The Department of the Treasury has yet to announce how much funding the Big Three will receive, but look for the amount to at least equal the $15 billion Chrysler and GM have requested. Terms of the funding are also unknown at this time.
Although the Big Three are far from out of the woods, a collective sigh of relief should be emanating from Detroit this morning.
