House clears $25bn for carmakers

[ThoughtCriminal]

Original Article

The House of Representatives on Wednesday approved a $25bn package of low-cost loans to help hard-pressed carmakers and their suppliers finance plant modernisation at a time of restricted access to public capital *markets.

The automotive loans are separate from the proposed $700bn bail-out for the banking sector, which is still being debated in Congress. The House approved the measure 370-58, setting the stage for Senate approval within days.

The industry’s case has been helped by the fact that Michigan and Ohio, the two states most dependent on the car industry, are key swing states in the November 4 presidential election.

Executives of General Motors, Ford Motor and Chrysler and their suppliers have lobbied heavily for the loans. Both presidential *candidates, John McCain and Barack Obama, have expressed support.

Shelly Lombard, analyst at Gimme Credit, a corporate bond research company, told clients this week that “blue collar workers are more sympathetic victims than ‘rich’ investment bankers. So it’s easier to defend loans designed to save close to 100,000 jobs in the shrinking US manufacturing industry.”

The go-ahead for the car industry loans has been written into a stop-gap spending bill, known as a continuing resolution, which must be passed to keep the federal government running beyond the end of the fiscal year on September 30. Congress and the White House have yet to agree on details of the fiscal 2009 budget.

The loans were originally authorised in an energy bill passed last December to finance the retooling of plants for more fuel-efficient vehicles, especially hybrid and electric cars. But they have become a crucial prop for Detroit carmakers.

The continuing resolution provides funding for $7.5bn, which is the estimated subsidy on the loans – in other words, the cost to the government of providing them at well below market rates.

The loans will not take effect until the energy department has written detailed regulations dealing with, among other issues, which investments will qualify and conditions for repayment. Congress has directed the department to begin writing the regulations quickly and will provide any extra staff required to do so. One lobbyist said he hoped the regulations would be completed by early 2009.

All carmakers and suppliers with operations in the US are theoretically eligible. However, the energy bill restricts benefits to plants that have been in operation for at least 20 years, thereby excluding most foreign carmakers.

A Toyota spokesman said his company was agnostic on whether it derived any benefits. It has kept a low profile in the debate on the loans.

The Detroit-based car*makers have insisted that the loans, known as the Advanced Technology Vehicles Manufacturing Incentive Programme, are not a bail-out because they must be repaid.

But critics have questioned the wisdom of supporting the motor industry with taxpayers’ money, especially in the wake of the huge amounts being provided to Fannie Mae, Freddie Mac, AIG and Wall Street investment banks.




More corporate welfare, when are we officially changing the title of our country to "The Socialist States of America"?

[jerkin]

Good post, I wasn't aware of this. I have a better idea, instead of giving $25 billion to the car companies that make shitty vehicles nobody wants and $700 billion to the credit agencies that were run into the ground by their crooked CEO's why don't we just not give anything to anyone and let the chips fall where they may?

Maybe that is exactly what this country needs is an economic collapse for people to get their heads out of their asses and revolt against this tyrannical government that does nothing but oppress and rob it's people. Sure it will be tough for a few years but it will be better for everyone in the long run. Think of the children, lol.

On another note, I read somewhere that the execs of Fanny Mae and/or Freddie Mac "fixed" the numbers of their earning last year so that they received over 100 million in bonuses. They were caught and fined 27 million. So just how exactly does that work, shouldn't someone be up on fraud charges? Now with the buyout we, the taxpayers, have to foot the bill for their fraudulent $100 million bonuses and the $27 million fine for doing so with no repercussions to the people responsible?

Don't want to imprison any CEO's, that might make other CEO's refrain from donating large campaign contributions. Our government is a joke.

[adymond]

Good post, I wasn't aware of this. I have a better idea, instead of giving $25 billion to the car companies that make shitty vehicles nobody wants and $700 billion to the credit agencies that were run into the ground by their crooked CEO's why don't we just not give anything to anyone and let the chips fall where they may?

Maybe that is exactly what this country needs is an economic collapse for people to get their heads out of their asses and revolt against this tyrannical government that does nothing but oppress and rob it's people. Sure it will be tough for a few years but it will be better for everyone in the long run. Think of the children, lol.

On another note, I read somewhere that the execs of Fanny Mae and/or Freddie Mac "fixed" the numbers of their earning last year so that they received over 100 million in bonuses. They were caught and fined 27 million. So just how exactly does that work, shouldn't someone be up on fraud charges? Now with the buyout we, the taxpayers, have to foot the bill for their fraudulent $100 million bonuses and the $27 million fine for doing so with no repercussions to the people responsible?

Don't want to imprison any CEO's, that might make other CEO's refrain from donating large campaign contributions. Our government is a joke.

Blaming the CEOs alone is like balming just one party. The politicians who pressured the CEOs to find ways that would allow people to buyhomes they couldn't afford to stimulate minority and lower socio-economic situations home ownership are just as guilty. How about the people who applied for the loans they knew they couldn't afford? How about the EPA/NTSI which makes it difficult to offer some of the cars available in Europe that could compete with foreign cars for MPG? There's plenty of blame to go around, but it mostly stems from government getting in the god damned way.

[jerkin]

Agreed adymond, and I wasn't blaming just the CEOs, I blame the .gov also. That's why I say F it, don't do anything, let the economy collapse and start over. I'd rather deal with the hardships now than have to see my kids deal with it in 10 or 20 years. We seriously need a revolution in this country. Getting caught with your hand in the cookie jar is nothing today. The crooked judges won't sentence the crooked politicians to any jail time so it's just a repetitive cycle.

I don't feel sorry for the people that took out loans that they couldn't afford either. If someone lost their job that's one thing but if you are too stupid to know what you can swing per month then oh well. Same thing goes for the dumb asses that signed the variable rate mortgages. If you don't realize that these interest rates are not going to last for the next 20 years then you don't deserve to own a house.