Bush ‘ready’ to use TARP funds for auto bailout

The Bush administration has reversed its position in the wake of the Senate’s failure to pass an auto bailout bill and is now willing to use money from the $700 billion TARP fund to help the Big Three automakers survive.

The defeat of a $14 billion bailout plan in the Senate late Thursday left the administration little choice but to tap the $700 billion bailout approved by Congress in October, the Troubled Asset Relief Program or TARP.

“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,” White House Press Secretary Dana Perino said in a statement. “A precipitous collapse of this industry would have a severe impact on our economy.”

Talking to reporters after the release of the statement, Perino said that President Bush had met with aides Friday morning to discuss options.

Details of when the help might be provided out of TARP, how much money would be made available, and any restrictions on the cash were not immediately available. The Treasury Department, which controls the TARP fund, also said it was looking at using the remaining money as stopgap help for the automakers.

“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,” Treasury said in a statement.

GM says they need $4 billion by the end of the month or they will be forced to declare bankruptcy. There is no indication yet of how soon the Treasury Department will make the TARP funds available or what restrictions will be placed on the use of the money.