The White House could step in to save America’s collapsing car industry, it emerged this evening.
President Bush has suggested that he’s ready to offer car-makers access to a £469 billion rescue fund that was meant to prop-up Wall Street.
Pulling an astonishing handbrake turn over the issue, Bush is set to allow General Motors and Chrysler access to the Troubled Asset Relief Programme (TARP).
Set up in October, it is money that has been underpinning some financial firms and banks. Until now, the White House has opposed industries having access to the £469 billion pot.
But it’s understood that the very real spectre of huge job losses has forced the outgoing President’s hand.
"A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time,” said a White House spokesman.
TARP allows Washington to use taxpayers money to take a stake in struggling firms. The firm is then expected to repay the money over time.
If Bush offers the car-makers some of the fund it is likely to open the floodgates to other struggling industries and companies.
There would be none of the restrictions on car-makers that were associated with rejected $14 billion House of Representatives bill.
White House whips had warned senators that Bush could offer this unprecedented lifeline before they voted against the $14 billion bailout plans last night, although it was widely believed this move was unlikely.
Industry analysts believe that Chapter 11 bankruptcy protection (another option being considered for GM and Chrysler) would not help the firms, because customers would be reluctant to buy cars from manufacturers with such uncertain futures.