So my topic is the auto industry and i found this article in Naked Capitalism which is interesting and somehow is going to help me with my paper… i just havent tied it in yet…
In the article Treasury Soliciting Bankruptcy Funding for GM, Chrysler, is talking about how the TARP has given Citi $45 Billion in loans, and other smaller companies have lent Citi about $250 Billion. GM and Chrysler (this article is from February, so lets ignore what has happened with GM and Chrysler since then) have borrowed $17.4 Billion and are looking to borrow an additional $21.6 Billion. They were not granted the loan and the treasury it threating them to put the two car manufacturers into bankruptcy.
Administration officials involved in the auto talks said
“they are trying to find a way to restructure the two companies without resorting to bankruptcy proceedings”.
Others in the Obama administration say
“that the option of Chapter 11 filings by the two auto makers needs to be seriously considered.”
Lenders do not want to lend GM and Chrysler the money for the following reasons:
- they wont get all their money back at the end
- GM and Chrysler believe that they do not need to file for bankrupcy, they just need about $100 Billion to get rid of all the debt they have… (whose going to lend that kind of money)
Basically, i want to understand why the TARP will go so far for Citi, but wont lend the money over to GM and Chrysler. This is still more research i have to do!!!!
By: Armenis Perez
