GM and Chrysler were not deemed “financially viable” by the Energy Department, a critical benchmarks that makes them ineligible for next month’s disbursement of TARP funds.
From the Washington Post:
Next month, $25 billion in loans aimed at producing more fuel-efficient cars will start flowing to suppliers and automakers — just not to the two companies most in need of funding, General Motors and Chrysler.
The Energy Department program dictates that companies must be “financially viable” to receive the loans. And last week, the Obama administration ruled that, at least for now, both GM and Chrysler cannot meet that benchmark.
The president gave GM 60 days to rework its restructuring plan by negotiating concessions from the United Auto Workers union and its bondholders. In 30 days, Chrysler must do the same, plus complete its proposed alliance with Fiat.
“We don’t see this as a denial of our application,” GM spokesman Kerry Christopher said. “Until the determination that we’re a viable company can be made, we’re not going to be given the loans.”
Energy spokeswoman Stephanie Mueller said the department could not comment on individual applications.
GM has applied for $10.3 billion to fund projects such as the Chevrolet Volt, its plug-in electric car. Chrysler is seeking about $8 billion to build hybrids and other battery-powered vehicles.
Ford, which may be the only domestic automaker that qualifies, applied for $5 billion in direct loans by 2011.
After lawmakers protested that these critical loans weren’t moving fast enough to help the struggling auto industry, Energy Secretary Steven Chu said the first round of loans would be granted in May.
“We’re still on track to meet the secretary’s time line of offering loans within the next few weeks,” Mueller said.