The U.S. Treasury Department, trying to stabilize the collapsing auto industry, will provide up to $5 billion in financing to troubled auto-parts suppliers who are linked to the three major U.S. carmakers, officials said Thursday. The funding would come from the government's Troubled Assets Relief Program (TARP), congressional aides said. The Obama administration will create a financial entity to provide funds for auto parts that big suppliers have shipped to the three automakers but have not yet been paid for. Treasury Secretary Timothy Geithner said in a statement that the program would “help stabilize a critical component of the American auto industry during the difficult period of restructuring that lies ahead.” “The program will provide supply companies with much needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need,” Geithner wrote. Auto suppliers have requested up to $25 billion to stabilize the U.S. auto industry and have met with members of President Barack Obama's auto-industry task force, which is reviewing $17.4 billion in loans to General Motors (GM) and Chrysler, as well as requests for more money. Many of the country's 5,000 auto-parts suppliers have been troubled for several years as GM, Ford, and Chrysler have reduced production of vehicles because of declining sales. Their outlooks have worsened with the economic slump, a sharp drop in auto sales, and prolonged auto factory shutdowns from December to early February.
