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Outside advisers to the U.S. Treasury are lining up contingency financing options for General Motors and Chrysler as part of a review of restructuring options for the auto makers, a Treasury official said on Monday.
The official commented to Reuters after the Wall Street Journal reported that outside advisers to the Treasury were talking with lenders about financing of at least $40 billion for the car companies, in case the two auto makers needed it.
People involved in talks with senior administration officials told the paper that the administration believes that the option of Chapter 11 filings by the two auto makers needs to be seriously considered.
"Everything is on the table right now," one person involved in the matter told the paper, adding that President Barack Obama does not want to see more massive job losses in the auto industry.
The Treasury official told Reuters that the action is not an indication of future plans for the companies, but is aimed at ensuring all options are properly considered and made available.
The administration also does not want to anger the United Auto Workers union by appearing to push for bankruptcy, the Wall Street Journal report said, citing the person involved in the matter.
The initial discussions call for private banks to provide the financing known as a debtor-in-possession (DIP) loan with the government guaranteeing or backstopping the loan, the paper said.
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