Hard up for cash, the lending arms of all three major U.S. automakers have asked for access to the Federal Reserve's new short-term lending program.
GMAC Financial Services, 49% owned by General Motors Corp., has applied for the program, called the Commercial Paper Funding Facility, spokeswoman Gina Proia said. "We were approved to participate" on Monday, she said.
Ford Credit, a subsidiary of Ford Motor Co., also applied for the program, according to spokeswoman Brenda Hines.
And Chrysler Financial, the lending arm of Chrysler, has registered for access to the backstop, according to a person familiar with its operations.
Under the program, the Federal Reserve Bank of New York buys 90-day short-term notes, giving the debt issuer access to cash in a tight market. Neither Ford nor Chrysler would confirm that it had been granted access.
The news that all three automakers had applied for the program is the first concrete step taken by the companies in Washington to shore up their precarious cash positions. But all three said they were exploring other options with the Federal Reserve and the Treasury Department.
"Obviously the automakers are going through a particularly difficult time," White House spokeswoman Dana Perino said Tuesday.
"The automakers have been in contact with us. We've been talking to them at various levels and at different departments, including Energy, Treasury and Commerce. And we're trying to work with the tools that Congress has provided us."
GMAC will issue the debt through its New Center Asset Trust facility, which can borrow as much as $10 billion.
In recent months, all three automakers have been forced to curtail lending to consumers and dealers as their access to cash has dried up in the credit crisis. GM said Tuesday that it would cease lending in seven European countries, including Finland.
As a result, they have had to draw down existing credit lines and tap their cash stockpiles. Both GM and Ford were burning about $1 billion a month as of the second quarter. As a privately held company, Chrysler does not release financial statements, but it is estimated that its cash burn is at least $300 million a month.
Of the three lending units, GMAC is perhaps best poised to access the various assistance programs introduced by the government in recent weeks.
