Mich. lawmakers want US help to free up auto loans

Wed Oct 22, 2008 5:27 PM EDT
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Michigan lawmakers asked the government on Thursday to make it easier for car buyers to get loans, in hopes of helping U.S. automakers ride out the financial crisis.

The state's congressional delegation want Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to use their powers under the $700 billion bailout to buy troubled assets quickly from auto finance companies.

Democratic Rep. John Dingell also said automakers were considering asking the Fed for access to a program that provides low-cost credit.

"We are not ashamed to point out that this crisis that we have on credit did not begin in the auto industry, it began in the financial industry," Dingell said.

Dingell, a longtime advocate in Congress for automakers, declined comment on whether the financial crisis could lead to a bankruptcy filing by any of the Detroit Three — General Motors Corp., Chrysler LLC or Ford Motor Co.

"The situation is very serious with regard to all three of the manufacturing companies," Dingell said. The situation is equally serious for auto suppliers and dealerships, he added.

In their letter to Paulson and Bernanke, the lawmakers said the lack of liquidity in credit markets could cripple the auto industry. Many banks and auto finance companies have tightened credit standards because they cannot borrow money to lend or they have been reluctant to lend and risk defaults.

"They need to do for autos what they're doing for the mortgage industry," said Sen. Carl Levin, D-Mich.

GM spokesman Greg Martin said the government "should consider all of its tools, some recently enacted, to support industries that are in distress." He said GM continues to "keep all of our options open" but would not discuss any talks GM may have had with the government.

Ford spokesman Mike Moran said "well functioning credit markets are vital for the entire industry including dealers and suppliers."

The lawmakers said they may try to expedite the availability of $25 billion in low-interest loans approved by Congress last month. Levin has said he may try to double the loan amount, which would help the industry retool plants and build fuel-efficient vehicles.

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{"commentId":3639062,"authorDomain":"iliketuandapril"}
B-online

No doubt for the auto industry! Tough times for that industry.  A huge retail segment may be next to feel the pain.

{"commentId":3639062,"threadId":"396490","contentId":"2028925","authorDomain":"iliketuandapril"}
    Reply#1 - Wed Oct 22, 2008 7:05 PM EDT
    {"commentId":3640653,"authorDomain":"buscaplayas"}
    Curious Bob

    Here we GO again.  Pumping up an industry that is greatly responsible for the @#@& we are in.  These troglodytes deserve to go the way of the dinosaurs, because that's what they are.  They sucked on the government teat through car fleet sales and other sweetheart stuff and finally made their way to becoming mediocre at best, pushed aside by foreign auto makers who long ago knew what the people wanted and supplied it.
    It would be almost criminal to bail out these "socialized" dinosaurs who are just waiting for the gas prices to go just a little lower before they start trying to sucker the American buyer into getting more gas guzzlers.  Their record is poor.
    If the government is really bold enough to give these undeserving recipients of previous largess, free money once more, there should be strict conditions attached.  No loan guarantees for cars that are not hybrids, total electric (or other truly renewable renewable resource fuel) or at least getting 40 MPG.
    The money would be better spent to finance serious start-ups or bring in some foreign companies that build fuel efficient cars and let them hire US workers.  If the unions or management then kills off the industry through greed, then bye, bye.
    The US auto industry has to be looked at with a demanding eye.  The government-industrial complex of the past is too expensive a luxury for today, one reason is that it ushers in non-competitive socialism and destroys incentive.
    Kick their butts!

    {"commentId":3640653,"threadId":"396490","contentId":"2028925","authorDomain":"buscaplayas"}
    • 1 vote
    Reply#2 - Wed Oct 22, 2008 8:28 PM EDT
    {"commentId":3640922,"authorDomain":"kikaiju"}
    kikaiju

    This plan is BS.  I am sorry but that's the only thing to call it.   I feel bad for the auto industry but the solution for them is definitely NOT to put more people in cars they cannot afford.That is exactly the thing that doomed housing, putting people in houses they could not afford to pay for.    Now they want to repeat it with cars?  Insanity.

    What next, will the big screen TV salespeople put out a proposal to extend credit to their customers?     And then the hot tub salespeople?  And the RV salespeople? Where does it end?

    But even if you let people get these cars, it's not over.   When the loans start going bad (because you sort of need a job to make loan payments,) we'll see a cascade effect of repossessions and ruined credit which will mean these customers will not be able to buy a car again for maybe 10 years, if ever.  So you save the auto industry now but condemn it to death later on.   Not that the auto industry has never been afraid of committing suicide. 

    Years ago they pushed cheap leases and flooded the market.  Three years went by and suddenly all those leased cars came back, drove resale value into the ground and imploded auto financing across the board.  It was so bad, in 2003 it nearly forced Mitsubishi completely out of business. 

    But hey, they were making auto lease quotas hand over fist for a while.  Short term profits but no regard to the long term.    It doesn't work.

    {"commentId":3640922,"threadId":"396490","contentId":"2028925","authorDomain":"kikaiju"}
      Reply#3 - Wed Oct 22, 2008 8:46 PM EDT
      {"commentId":3650312,"authorDomain":"Prosper-Inc"}
      Prosper Inc

      Heres an idea - How about only letting people who can afford cars, buy them??  Call me crazy, but thats my two cents!!

      {"commentId":3650312,"threadId":"396490","contentId":"2028925","authorDomain":"Prosper-Inc"}
        Reply#4 - Thu Oct 23, 2008 11:33 AM EDT
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