In a statement released on Friday, the U.S. Treasury said it "stands ready" to prevent the failure of automakers and is prepared to help the Big Three until Congress reconvenes in January.
The headline came just minutes after White House Press Secretary Dana Perino said the president is willing to consider using money from the TARP to bail out the Big Three Detroit automakers after legislation was thrown out of the Senate on Thursday night.
The collapse of the U.S. auto industry would have a destabilizing effect on the economy, she said, adding there is no decision yet on the timing of action to be taken for the industry.
Such a move would be one of the final hopes for General Motors and Chrysler, who said they do not have the capital to meet their year-end obligations.
General Motors has consulted with law firms over the possibility of a Chapter 11 filing.
On Thursday night, the U.S. Senate voted down the proposed $14 billion auto bailout bill to save automakers GM, Ford and Chrysler after the bill went through the House of Representatives on Wednesday.
"It's going to be a very, very bad Christmas for a lot of people based on what takes place here tonight," said Senate majority leader Harry Reid after the vote failed.
Reid said he hopes the Bush administration will use money from the Troubled Asset Relief Program to help the automakers.
GM shares are down 20% on the day while Ford shares are down 9%.
By Erik Kevin Franco
©CEP News Ltd. 2008
