Auto Suppliers' Bailout Plea Rebuffed (Update)

Updated from 2:40 p.m. EDT

The U.S. government has rebuffed an appeal by the auto-parts industry for as much as $10 billion in further aid.

As reported, two trade groups traveled to Washington last Wednesday to meet with the Treasury Department's auto task force and request between $8 billion and $10 billion in guaranteed bank loans.

But Ron Bloom, one of President Obama's lead advisors on the auto industry's struggles, told the group that because carmakers had seen no disruption in supply from parts companies, he "didn't see a need for the government to step in," said Neil De Koker, chief executive of the Original Equipment Suppliers Association, recalling the conversation.

A Treasury spokesperson wasn't immediately available to comment.

Bloom also told the group that the role of the task force wasn't to prevent bankruptcies, and that consolidation among parts companies was necessary moving forward, according to De Koker.

"It was a disappointing meeting professionally," De Koker said in an interview. "When you go in with your hand out it's kind of nice to come out with something." But, he added, Bloom also indicated that should the situation deteriorate, Treasury could alter its stance on a bailout.

Auto parts suppliers will continue to lobby Congress for help in pushing their agenda. Late last week, De Koker and others met with members of the auto caucus in the Senate and House.

Precipitating the suppliers' request has been the unwillingness of banks to help parts companies refinance their debt, De Koker said. According to a March survey conducted by the OEM Association, 20% of its members said bankers were helping them refinance, while 80% said banks were "actively working to get away," in De Koker's words. That is, the banks were calling in loans if suppliers violated covenants.