Paulson: 700BN Rescue Bailout Not for Auto Makers

A new twist in the Detroit saga could sink one or three of the major players before this year is over. US Treasury Secretary Henry Paulson has said he'd rather see the rules of the USD25 billion retooling programme rewritten to open up the auto financing market.

"We need a solution, but the solution has got to be one that leads to viability," Paulson told the media. "The intent of the TARP [Troubled Asset Recovery Program] was to deal with the financial industry." Paulson said "fixing" the financial services industry would be the key to solving automakers' financial problems as access to consumer credit is directly linked to the former.

Barack Obama has urged Congress to spend the allocated USD25 billion retooling fund, but the Energy Department has said it doubts the money would be released before the new year. Meanwhile Detroit's finest are bleeding cash at alarming rates and are not sure how to react to the situation as yet. Chrysler on Monday became the first of the three to apply for funding on the USD25 billion programme.