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Document Type

Case Study

Abstract

The Global Financial Crisis that began in 2007 intensified the decade-long malaise of two of the largest auto manufacturers in the US, General Motors and Chrysler. Their possible collapse was deemed to pose a systemic risk by the United States government. In response, the Department of the Treasury made efforts to provide support to the automotive industry through the Automotive Industry Financing Program (AIFP). As US auto parts suppliers experienced deteriorated automotive markets, disrupted manufacturer operations, and stressed credit markets, the Treasury announced the Auto Supplier Support Program (ASSP) on March 19, 2009, as an auxiliary program to the overall AIFP. The ASSP was run through the two auto manufacturers and only suppliers selected by those companies could participate. Participating suppliers could use the program to access government financing for any eligible outstanding manufacturers’ receivables. The ASSP established bankruptcy-remote special purpose vehicles (SPVs) to purchase eligible receivables from participating suppliers for a fee. The SPVs were funded through a cash contribution from GM and Chrysler and a $5 billion total loan commitment from the Treasury, authorized under the Emergency Economic Stabilization Act of 2008 (EESA). The program outcomes were considered mixed and its specific role in reducing the pressure on US auto parts suppliers is difficult to determine. The ASSP was terminated in April 2010, after all loans made under the program were repaid. The Treasury collected $116.4 million in interest and value from the ASSP.

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