Car makers want government loans too
The latest in line for financial help from the feds are the auto makers. They're in Washington to ask for government-backed loans to retool their factories for fuel-efficient cars. John Dimsdale reports.
U.S. Capitol Building (Paul J. Richards/AFP/Getty Images)
More on Auto Industry, Politics
TEXT OF STORY
The thing about government bailouts is, once you start, everybody wants one. First, there was Bear Stearns. Now, there's Fannie and Freddie. And today in Washington, the car industry is looking for some love, I mean, money from Congress. Here's John Dimsdale.
John Dimsdale: Car makers need new capital to retool for more fuel-efficient vehicles. But lenders are demanding premium interest rates since prospects for car company profits are dim. So the industry wants government-subsidized loans at low-interest rates. Why should taxpayers help? David Cole at the Center for Automotive Research says because the government is requiring more fuel-efficient cars.
David Cole: In a sense, the government has laid some pretty heavy stuff on the industry, and one of the consequences of the run-up in energy prices is a dramatic reduction in revenue by the industry.
After Fannie and Freddie, Congress may not have a taste for more government bailouts, but Cole says, in the end, there may not be a cost to taxpayers.
Cole: The Chrysler bailout in the early 1980s, the government actually made money.
Car makers are also making a political appeal: What politician wants to see more layoffs from car factories in the swing states of Michigan and Ohio?
In Washington, I'm John Dimsdale for Marketplace.
Comments
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From davenport, IA, 09/16/2008
tax payers money for ford and g.m. so they can build more cars in mexico with there chineese motors and parts. how about honda and toyota who are building us factories
From Culver City, CA, 09/15/2008
While I agree that the auto industry's business leadership is questionable, I'm not sure you grasp the implications of allowing the American auto industry to fail. Perhaps you've taken it for granted that the US hasn't been part of any war zone, but if all goes south, the auto industry serves as one of this country's lines of defense. American factories will be retooled as the war machine sees fit just as they were in WWII. The US cannot afford to have certain industries fail.
From Hong Kong, 09/10/2008
I listened to David Coles reasoning for lending money to the automakers but why should taxpayers pay for the automakers mistakes? They ignored and lobbied against more fuel eficient cars for years. Then made money off SUV's. Where did all that money go?
They ignored warnings about future rises in oil prices, increased demand from consumers for fuel efficient cars and did a bad job of financing customers purchases. Why do taxpayers have to bail out poor leadership at privately held businesses?
Taxpayers should offer loans to businesses that are efficient and offer products that make sense. Offer loans to foriegn automakers in the USA. They make cars that we said we wanted and make sense in todays world.
No sympathy for the Big Three Automakers and thier corporate fat cats. I am from Ohio and lived in Toledo for the 1990's. I understand the impact of poor autosales but Ohio also has a Honda plant too. They are doing well. I wont vote for a politcian who supports bailing out the Big Three automakers again. Especially with their overpaid executives who cant plan well. The middle class is already struggling enough.
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