Congress approves $25 billion loan to auto industry

Among all the news of the erstwhile $700 billion bailout for Wall Street, the approved $25 billion bailout for Detroit may have slipped past your radar. Chrysler, Ford, and General Motors have been asking Congress for money to help them get their factories up to green-speed. They’ve argued that in order to make vehicles that meet new fuel-efficiency standards of at least 35 miles per gallon by 2020, they need serious infusions of cash.

The $25 billion in loans from the Department of Energy to the auto manufacturers were actually authorized by Congress early this year but not funded. That changed last Saturday when Congress approved the line of credit. According to the Congressional Budget Office, automakers could use these loans to "equip or establish facilities to produce ‘advanced technology vehicles’ that would meet certain emissions and fuel economy standards; component suppliers could borrow funds to retool or build facilities to produce parts for such vehicles."

The auto manufacturers are getting a very good interest rate on their loans, according to the Associated Press, at about 5 percent. With their poor bond ratings, these automakers never qualify for such a sweet rate without government intervention. Conversely, auto buyers are having a harder time getting a car loan unless their credit records are spotless.

Many buyers are eager for clean, fuel-efficient vehicles, as interest in big SUVs and trucks wanes thanks to the cost of gas, the credit crunch, and growing environmental awareness. Plus, green-collar jobs would be most welcome in this sagging economy. We can only hope all this money adds up to something good.

—Desiree Calamari

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Comments

[everett whitney]

That $25 Billion is Not a loan in the normal sense whatever!
Not a shread of collateral ... whenever these default { and, at least one will } , there'll be zero with which to repay these Billions!

Not in the slightest similar to the first time the government actually loaned Chrysler Corp / Lee Iacocca monies, which WAS repaid - with interest - and early ! Not a great chance of that repeating now, sadly.

[Cale]

Long overdue, IMHO. Protecting American industry and the jobs they provide should be the first priority of our representative government.

[Darrell Haynes]

WoW.. Can we handle this

[Glenn]

It's about time the taxpayer pays his share to help the Big 3! The Japanese and European governments have been financially supporting their automakers for decades now.
The global automotive competitive landscape is now on equal footing!

[Robert DeBellis]

Lets see, what do I think of this. It's another a rip off of the taxpayers. Low interest long term loan. The big 3 automakers didn't know for decades we need fuel efficient vehicles. They didn't know gas prices were going to go up. They don't know how to make fuel efficient vehicles. B-ll Sh-t! It stinks, along with most of government does these days. These corporations have been term focused and have been lobbying to remove fuel efficency for years. They got their and now we pay.

[Carl]

My Chevy Colbolt Gets 36/mph and has 96,000 miles on it no troubles at all just oil changes an front brakes Pads at 56,000
miles.

[Chief Enterprises]

Hey dude...This is a good news for the automobile people and professionals in US. The money they are giving to them is really useful and this is incredible. I don't know what plan they have put for this auto industry for this money.