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The $5 billion in federal aid designated for the auto parts industry may not be enough to sustain suppliers if General Motors Corp. (GM) and Chrysler LLC. file for bankruptcy, a senior economist for the Federal Reserve Bank of Chicago said Wednesday.

Thomas Klier said the quick and orderly bankruptcy restructuring being contemplated for the two auto makers would be difficult to achieve if suppliers begin collapsing because payments to them are suspended or reduced while the auto makers are under bankruptcy protection.

"It's hard to envision the process being as clean and neat as is being talked about," said Klier, after a panel discussion sponsored by the Michigan-based Center For Automotive Research.

The U.S. Treasury Department has agreed to loan the auto companies up to $5 billion from the Troubled Assets Relief Program to make payments to their suppliers.

But it's unclear how long that money would last if Chrysler or General Motors file for bankruptcy. Some industry observers have estimated the money would be exhausted in just a few weeks if both companies file.

The auto makers are trying to avoid bankruptcy by working out cost cuts with the United Auto Workers Union and agreements with banks and bondholders to reduce their heavy debt loads. The Obama administration, which is keeping the two companies afloat with more than $17 billion in federal loans, has given them only weeks to work out deals.

Klier said the government is leaving decisions about the distribution of federal money for suppliers to the auto companies, essentially allowing them to pick and choose which suppliers they want to survive.

But the layers of companies that supply component makers make it difficult to identify all the companies worth preserving in a short time frame.

"It's messy," said Klier, whose research has focused on the parts industry. General Motors and Chrysler "don't know who's in the second and third tiers of suppliers that can't go under."

Klier added it would be nearly impossible keep the fallout from Chrysler and General Motors' decisions from affecting other auto makers. Parts suppliers on average do business with four different car manufacturers.

Dozens of parts companies have folded or filed for bankruptcy. Companies have come under pressure in recent years from rising material costs and shrinking margins on components.

More recently suppliers have been suffering from plunging production volumes of cars and light trucks because of the downturn in the U.S. economy.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com