Congress Likely to Approve U.S. Loans to Automakers

(MoneyWatch)  It looks as if Congress will pass legislation that will fund $25 billion for direct loans to automakers, to re-tool their manufacturing facilities to produce the next generation of advanced technology vehicles.

The $25 billion was authorized in last year's Energy Security & Independence Act, which became law in December of 2007, according to Rep. John Dingell, D-Mich. The loans will also help automakers meet tougher standards for Corporate Average Fuel Economy.

In a written statement, Dingell insisted that the loans are not a bailout ?€" something the Detroit 3 have been careful to maintain ?€" and not especially costly, at least not compared with proposals to shore up banks and Wall Street by purchasing bad loans with taxpayer money.

"Some critics will call this loan package a bailout. It is not," Dingell said.

"These loans amount to a little more than 1 percent of the real bailout -- the one that the Bush Administration wants for Wall Street at a cost of $700 billion to taxpayers," he said. Dingell, a frequent ally of the Detroit 3, said the loans to the automakers will be repaid to the taxpayer, at a profit.

"The auto direct loan package is a good deal for auto workers and a good deal for taxpayers," he said. The "1 percent" figure Dingell cited refers to an estimated $7.5 billion that Congress will set aside as a precaution against default, not to the $25 billion in principal.

The U.S. House of Representatives passed the legislation on Sept. 24. The U.S. Senate is expected to pass it before the end of this week, and President Bush is expected to approve it shortly after that.