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Chrysler Working to Secure Additional $3 Billion from Treasury

January 14, 2009

DETROIT — Chrysler LLC is seeking $3 billion in additional government aid and its finance arm is in advanced talks with the U.S. Treasury to obtain a multibillion-dollar cash infusion that could be finalized by Friday, according to The Detroit News.

Chrysler is the only one among Detroit's Big Three automakers seeking immediate additional aid. General Motors Corp. said it had no plans to seek more aid beyond the $13.4 billion the U.S. Treasury Department is loaning the OEM from the $700 billion Wall Street rescue fund, known as the Troubled Asset Relief Program, or TARP.

Ford Motor Co. said Sunday that it would not seek a $9 billion line of credit as planned because the company was satisfied that it would receive government help if auto sales weaken substantially this year.

"All the mechanisms are in place that if [the economy] really degraded, then we'd be able to ask for help," Ford CEO Alan Mulally told The Detroit News on Sunday, "but right now we have no plan to do that."

Chrysler received $4 billion last month from the TARP fund. The automaker had fought for $7 billion to survive through March 31 and Chrysler Vice Chairman and President Jim Press said Sunday that he hoped to obtain the remaining money.

"We are making good progress to qualify for a total of $7 billion, which puts us in a really good financial position," Press said.

The Treasury Department declined to discuss the talks. "We're in touch with the automakers and their financing sources and continue to evaluate their financing needs," Treasury spokeswoman Brookly McLaughlin said Sunday.

Detroit's automakers are struggling to reorganize amid one of the worst auto markets in decades, which forced GM and Chrysler to seek government loans to survive. Auto sales fell 18 percent in 2008, the lowest yearly tally since 1992, and demand is expected to be weak again this year.

Chrysler said last month that 20 percent to 25 percent of its customers couldn't get credit to buy new vehicles, which was one reason the automaker's sales plunged 53 percent in December, the highest of any automaker.

The Bush administration is working to complete action on financing help for Chrysler Financial LLC before it leaves office on Jan. 20. A government official involved in the talks said it would be less than the $6 billion package GMAC LLC received.

"We're very hopeful that (with) continued support from the Treasury and access to the TARP funds for Chrysler Financial that we'll be able to provide additional retail support," Nardelli said. "Our hope is we would get that resolved within a week or so."

Chrysler Financial's request is separate from Chrysler's request for $3 billion, Chrysler spokeswoman Shawn Morgan said.

After receiving its TARP money, GMAC announced new financing deals for customers and dropped its credit requirement for loans from a score of 700 to 621.

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