WASHINGTON, Aug. 22, 2008
Automakers Seek $50B In Loans From U.S.
Industry Wants Help To Modernize Assembly Plants, Develop Fuel-Efficient Vehicles
-
Automakers plan to urge Congress to provide the industry with $50 billion in low-interest loans to help modernize assembly plants and develop fuel-efficient cars. (AP Photo/Gary Malerba)
-
Interactive Motor Away Things to know before hitting the road.
Industry officials said the loans, which are twice the amount authorized in last year's energy bill, are a top priority when Congress returns next month because of the declining fortunes of Detroit's automakers and tightening credit markets.
"The amount of concern and urgency from the Detroit companies has increased in the last month and significantly ratcheted up what they're communicating what their funding needs are," said Alan Reuther, legislative director for the United Auto Workers union.
Congress authorized $25 billion in low-interest loans in last year's energy bill, but the auto industry's allies in Congress have been unable to get funding for the plan.
The loans would provide low-interest credit for up to 30 percent of the cost of retooling facilities to build hybrids, plug-in hybrids, electric cars and other alternatives.
Detroit's automakers have struggled this year amid a sluggish economy and consumers shunning large sport utility vehicles and trucks because of high fuel prices. General Motors Corp. reported a second-quarter loss of $15.5 billion and Ford Motor Co. reported an $8.7 billion loss.
The auto industry's future has been a top issue in Midwest battleground states key to the presidential race. Sen. John McCain had opposed the retooling efforts, arguing that his $5,000 tax credits for consumers who buy fuel-efficient vehicles and a $300 million battery prize would accomplish the same goal.
But in a statement released Friday, the Arizona Republican said Congress should fund the loan program in the energy bill: "I believe we should fund it and take action that will assist Detroit and its suppliers in making it through this difficult time of transition."
Douglas Holtz-Eakin, McCain's top economic adviser, said the conditions had declined for auto companies seeking access to capital. "It's a common sense response to the realities on the ground," he said.
Democrat Barack Obama previously outlined support for the loans, and a 10-year, $150 billion program for green manufacturing. Obama's campaign said Friday they would support the $50 billion loan program.
Auto industry officials have argued that the loan program would not represent a bailout, but would be similar to aid lawmakers have given to Wall Street investment banks and struggling mortgage firms. They also note that auto companies face tens of billions of dollars in costs from new fuel economy regulations.
"We don't see it as a bailout. We see it as government assistance to help retooling tied to the production of these advanced technology vehicles," Reuther said.
Congress would need to appropriate $3.75 billion to provide up to $25 billion in low-interest loans to car companies and their suppliers, according to a July 25 letter to House Democratic leaders.
The plan, which is still being discussed, calls for $25 billion in loans to be available in the first year, followed by an additional $15 billion in the second year and $10 billion in the third year, industry officials said. To activate the full $50 billion in loans, Congress would need to set aside about $7.5 billion to guard against a loan default.
GM and Ford spokesmen declined to comment on whether their companies would be pushing Congress to raise the loan limit, but expressed support for the program.
The loans in the energy bill showed how "government policy can be aligned with consumer demand and the efforts of the industry," said GM spokesman Greg Martin.
Mike Moran, a Ford spokesman, agreed: "Congress created a program for direct loans and we're hopeful that they can fund those this year."
© MMVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
Add a Comment See all 80 Comments
- The reason this goes on is because of the voter.
You voted for welfare government and you pay for it.
They dont care about you it''s all about them - Reply to this comment
- noloyalisti said: "Why would the right wing fascist government give them welfare? "
It''s a neocon concept called ''too big to fail'', in which its a ''free market'' when you get ripped off by your bank, gas co, car co, insurance co, etc, but when they make bad decisions they are deemed ''too big to fail'', so qualify for bailout money composed of your tax dollars.
''Too big to fail'' is a real concept, understood by the Fed, which is worried it increases the ''moral hazard'' of such companies continuing to make bad decisions because there''s no downside.
So of like cutting taxes if you''re a Republican politician: no downside. - Reply to this comment
- So these moron American car companies want corporate welfare? Why were they pushing Hummers and giving huge donations to the Gay Old Party, the party of death and taxes? Why would the right wing fascist government give them welfare?
- Reply to this comment
- American automakers must build cars people want. That''s why they are not selling cars. They keep pushing plain looking cars with no innovative feature to make us want to buy them. The only change in US cars in the last three decades is the price. It''s the same old cars my grandmother used to drive.
Just look at Ford trucks for example, I heard a ford employee say they don''t like to change the design of their vehicles very much because they don''t want to turn off any potential buyers. That is the dumbest thing I have ever heard from an automaker. They must keep changing and innovating to keep the american customer. Otherwise we will simply buy an Acura, or toyota, or nissan etc.
It took Toyota, and Nissan to make big changes to their trucks before Ford and Chevy followed suit.
Ford and Chevy should be leading the way not following the japanese manufactures. Until they figure this out they will keep having money trouble. - Reply to this comment
- As is always the case, the marketplace is defining the demand for goods and services. It''s no surprise that when gas was between a dollar and two dollars huge SUV''s were flying off the lots. Now that gas is more expensive cars companies are adjusting their future product to meet demand. It''s not likely that oil and gas prices will slide down to the prices we enjoyed just a couple of years ago so it''s a simple adjustment to buying smaller and more efficiently as well as cutting back on wasteful driving habits. It''s not the end of the world - just the end of the massive earth killing SUV!
- Reply to this comment
- If the Repubs are to blame then tell me why is Obama supporting a tax payers loan for them?. You just dont get do you?
Your being robbed by the corps again, Fannie Freddie ring any bells?. Just wait when you see the other big banks start shuting down.
America your in trouble and you wont make it this time your done its game over. Store up some food Buy Silver & gold now before the crash comes.. - Reply to this comment
- If GM was going to get a major bailout the inside traders would have reflected that move in the market already. This obviously won''t materialize. GM is a long term investment you should be getting into now. The battery patent GM sold to Chevron will be over in 2014. Electric Cars are getting the push in the second half of 2010.
- Reply to this comment
- Mass stupidity, eternal rescue....
It''''s the Republicon Way.
--------------------------------------------------------------------------------
Posted by inventagod2
It''s more like: "Why pay for your own mistakes..."
We''re stupid americans and will once again pay for the mistakes of the CEOs...
Who cares? It''s not our money anyway... It''s the Chinese... and we''re never going to pay it back... - Reply to this comment
- They are only American companies when they need money, or protection under the law, otherwise they are not.
Just look at what happens when it''s time to pay taxes... They burry their money in offshore banks... but when someone infringes on their patten, or they need protection from a law suit, they all the sudden are american companies.
I say let the fail!
They don''t employ that many US citizens anyway... - Reply to this comment
- Why don''t they issue bonds like any other company would have to ? And why not outsource the executive jobs to India like they''re doing with their engineering positions ?
- Reply to this comment
- When the big three was making big money on the big SUV''s, the competition was building what the American public really wanted, a good car with good gas mileage. I have seen many people on the General Motors payroll that didn''t have to show up for work for years at a time, and still got a pay check. The big 3 have only themselves to blame for their situation.
- Reply to this comment
Mass stupidity, eternal rescue....
It''s the Republicon Way.- Reply to this comment
- GM & Ford should be allowed to fail. They haven''t been profitable in years due to mismanagement and trying to push gas guzzling pickups and SUVs down our throat.
Just paying retired workers huge pensions and healthcare costs add a couple grand to the price of a new car.
Alan Mulally was appointed to late to make Ford fly and Rick Wagoner of GM will go down as the worst CEO in history. - Reply to this comment
- Surrendering the taxing power of government(as always at gun point) to these companies, and that includes Wall Street, is armed robbery of the people of America. Is the free enterprise capitalist system dead? The taxes we pay are going in the pockets of these losers. Outrageous!
Posted by krisd999
These aren''t even american corporations. General Motors builds better cars in Germany than they do here. GM several years ago owned 50% of Hyundai. If Toyota had poorly managed it''s company, would the U.S. bail it out? GM did this in the 70s. Kept building huge gas guzzling full sized cars till OPEC put on the squeeze. Then the "new chevrolet" came out. An ugly junky box, poorly assembled. Of course the fat cows blame the cost of labor in this country. The United States is a nation designed around hatred for labor but what does any civilization do without it? U.S. companies want slaves like the Romans and the southern cotton plantation hogs that are now in he*ll. - Reply to this comment
- Automakers to government: The invisible hand of the free enterprise system slapped us silly. We''''re committed socialists now.
Posted by incog-nito
No, working folks are whining liberal socialists. It''s beneath huge concentrations of global capital to be considered such. How dare any peasant or serf make such accusation. The oligarchs have full entitlements and privilege. In the castle of Neuschwanstein, above king Ludwigs throne in the throne room, a beautiful mosaic depicts Ludwig only second to the king of kings, Jesus Christ. The elite get full of themselves. - Reply to this comment
- Hmmm, disgusting nation of right wing fascist republican hypocrites.
- Reply to this comment
- Hey, while they''re at it, I could use a small low interest loan too.
Have to keep me paying taxes and this would really help me out.... - Reply to this comment
- CBS Headline On June 23, 2008
McCain Proposes $300 Million Energy Prize
Ariz. Senator Wants To Give $1 Per American For Developer Of New Auto Battery
Hey it''s a start! - Reply to this comment
- Surrendering the taxing power of government(as always at gun point) to these companies, and that includes Wall Street, is armed robbery of the people of America. Is the free enterprise capitalist system dead? The taxes we pay are going in the pockets of these losers. Outrageous!
- Reply to this comment
- Well, surprise, surprise! Both McCain AND Obama support the taxpayer funded bailout.
I guess the November election will be ''pick a socialist'' day at the polls. - Reply to this comment
