This morning, White House press secretary Dana Perino released a statement on the failure of the $14 billion auto bailout. Here's the key passage:
Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary – including use of the TARP program -- to prevent a collapse of troubled automakers.The TARP program – the acronym stands for the Troubled Assets Relief Program – is the $700 billion in bailout money that had been designated to help the financial industry. While the TARP funds were never designed to go to the auto industry, they may represent the last, best option for keeping General Motors and Chrysler from going bust in the short term. Consider this: When reporters asked Perino, in response to the statement, what options for saving the companies other than TARP might be on the table, the press secretary declined to answer.
Now Senate Majority Leader Harry Reid has released a statement signaling that Senate Democrats support the White House's suggestion.
"I am encouraged that the White House seems to be considering using TARP for emergency bridge loans to the Big Three," he said. "I'm disappointed that Republicans Senators' partisan refusal to compromise prevented us from achieving a sound solution to this problem last night, but appreciative of the Administration's change of heart with respect to TARP."
Indeed, the White House statement represented a shift in the White House's position, which had previously been that TARP should only be used to help financial institutions.
"We have said all along that the Treasury already has the authority and resources to protect millions of Americans who work in our nation's struggling auto industry," Reid added. "With the stroke of a pen, Secretary Paulson can reverse what stubborn Republicans did last night – recklessly turning their backs on American families whose livelihoods depend on a healthy Detroit and risking further peril to our economy."
And Treasury appears prepared to released the money. A spokesperson released a statement saying this: "Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry."
UPDATE: A White House spokesman said this afternoon that we're "not going to hear anything today" about such a move; they are "gathering information and seeing what's possible" in terms of options, he said.
Treasury also signaled that it does not expect any kind of announcement today regarding TARP funds this afternoon. A spokeswoman said any "options" other than TARP would have to come out of the White House, since there are no other options through Treasury.