Congress To Approve Loans To Auto Customers
WASHINGTON -(Dow Jones)- The National Association of Manufacturers Wednesday urged the U.S. Congress to approve a federal loan program that would provide up to $50 billion to the bruised automotive industry.
"Now is the time for Congress to keep their promise to provide these loans," NAM President John Engler said in a prepared statement.
Engler said NAM supported an increase in Corporate Average Fuel Economy Standards because "Congress promised access to low interest federal loans for the auto industry to help them meet these expensive new standards."
Auto makers must spend billions of dollars in coming years to develop cars that meet stringent new standards for fuel efficiency, a transition that is expected to cost the industry $100 billion. But mounting debt, a steep decline in sales and tightened credit markets have crippled the ability of the Big Three to obtain loans at reasonable rates.
A program approved as part of last year's energy bill calls for up to $25 billion in government loans to be issued to auto makers and suppliers. But lawmakers never approved funding for that program.
With the outlook of U.S. auto companies becoming bleaker, the industry is lobbying heavily for $50 billion in loans now.
"Manufacturing is the mainstay of the U.S. economy, providing a primary impetus for economic growth, and accounting for 75% of export growth this year," Engler's statement read. "The automobile industry is a key to U.S. manufacturing; it is imperative to our nation's economic future that this vital sector be strong and competitive."
The loan program being pushed by auto makers as Congress meets this month would be the third government intervention of private industry this year, following bailouts of Wall Street firm Bear Stearns Cos. and now Fannie Mae ( FNM) and Freddie Mac (FRE).
Both major-party presidential candidates have come out in support of the auto loan program.
White House Press Secretary Dana Perino told reporters this week that the administration was in talks with lawmakers and auto industry officials about the need for the loans but declined to say whether the administration supported the program.
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