DETROIT -- A $5 billion Treasury Department lending program extended to automotive parts suppliers -- but criticized by them for being too expensive and confusing -- could end by April.
In March 2009, the Obama administration said it would provide $5 billion in financial aid to auto parts manufacturers. The Auto Supplier Support Program was designed to help suppliers, struggling in the wake of tight credit and severe vehicle production cuts, to obtain bank loans.
In April 2009, General Motors and Chrysler signed up to approve their suppliers for the loans. Ford Motor Co. did not participate.
In a report late last month, an inspector general overseeing the government's bailout fund for Wall Street and the auto industry said the supplier program would end by April.
In an e-mail statement, Treasury spokeswoman Meg Reilly said, "At this point, the New GM and New Chrysler are capable of helping find solutions for the financing needs of their critical suppliers." She did not respond to requests for the number of suppliers that have used the program.
But Neil De Koker, president of the Original Equipment Suppliers Association in suburban Detroit, said fewer than 100 Chrysler suppliers were processed, in part because the automaker slid into bankruptcy so quickly. An estimated 400 GM suppliers were approved before GM filed for bankruptcy, De Koker said.
He estimated that less than $2 billion of the $5 billion was used because suppliers were fully paid as critical vendors.
Suppliers' initial enthusiasm for the program later turned to indifference, sources say. "The paperwork was unbelievable," said workout specialist Joe Bione, president of the Whitehall Group of suburban Detroit.
Lawyer Walter Borda said several clients sought his help in applying for federal loans as they grew antsy about a bankruptcy by GM or Chrysler.
Other suppliers decided a 12 percent annualized interest rate for government money borrowed against their receivables was too expensive, said Borda, a partner in Borda & Lorenz of suburban Detroit.
In addition, he said, Citibank, which managed the Treasury program, was slow to gear up and generated a lot of confusion.
The clients who sought his help, Borda said, soon backed away from the program.
Neil Roland contributed to this report