Wednesday April 8, 04:57 PM
US pumps $5.0 bln in support of auto suppliers
WASHINGTON (AFP) - The US Treasury Department Wednesday launched a five-billion-dollar scheme to guarantee product payments to embattled auto suppliers that have been hammered by the auto industry slump and tight credit.
Government-rescued General Motors and Chrysler launched the taxpayer-backed support programs, the Treasury said.
Under the Treasury's auto supplier support program announced in mid-March, up to five billion taxpayer dollars will guarantee money owed to auto suppliers for the products they ship even if the US automaker goes bankrupt.
Auto suppliers that typically wait between 45 and 60 days for payment can now seek public guarantees on the money owed in order to obtain loans. Suppliers have been hamstrung amid a global financial crisis that has seized up credit.
"These efforts, backed by US Treasury resources, will help stabilize the auto supply base and restore credit flows in a critical sector that employs more than 500,000 American workers across the country," said Jenni Engebretsen, a Treasury spokeswoman.
GM and Chrysler have received a combined 17.4 billion dollars in public aid since December, and are still on the verge of collapse as the world's largest economy suffers its second year of recession.
President Barack Obama's administration has demanded they submit viable restructuring plans before further aid will be considered.
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