Taxpayer Bailout to Bail Out Automakers' Bad Loans

by Robert Farago

October 2nd, 2008 11:59 AM

taxpayer bailout to bail out automakers bad loans

You can’t kill the $700b federal bailout bill– sorry, “rescue package” with a stick. And now that it’s ballooned from two pages to over 400, the auto industry lobbyists have wet their beak. Automotive News [sub] reports that “House Financial Services Committee Chairman Barney Frank, D-Mass., confirmed this week that under the plan, the Treasury Department would have authority to buy securities backed by automotive loans. Automotive loans are not as troubled as mortgages, but in the current climate investors are unwilling to buy the securities, effectively cutting off the flow of credit, industry lobbyists say.” In other words, Uncle Sam is going to assume responsibility for billion of bucks in bad paper written by domestic automakers and their agents to move the metal, so that the feds can “free up” the credit market and enable automakers to write more bad loans to boost their bottom line. There ought to be a law. Or, in this case, not.

Comments

Join the conversation

4 of 17 comments

50merc on Oct 02, 2008

Don't know about you, but I wouldn't buy a used car from Barney Frank.

Like Reply
Joeaverage on Oct 02, 2008

Would somebody please put the stopper back into the sink drain? http://marketplace.publicradio.org/pdf/senatebillAYO08C32_xml.pdf I agree - amazing how urgent this crisis is yet they pin pork to it. Amazing how perfect our two candidates are but yet both signed the mess. Why didn't either of them stand up and fight this? Prove their value to the voters? Meanwhile I have this sneaking suspicion that this bailout - be it the Wal-Street version or the Detroit version is just dealing a bigger problem... I say let it fall apart which will educate a bunch of people and we'll start over. Of course - the people who need the most education will be comfortably isolated from the mess by multi-million dollar bank accounts.

Like Reply
Lynn Ellsworth on Oct 02, 2008
And again, the number of people fired for this financial catastrophe: zero. Of course - the people who need the most education will be comfortably isolated from the mess by multi-million dollar bank accounts. Why is it so difficult to look in a mirror? We had a housing bubble because people in the U.S. thought housing prices would continue to go up for ever. They didn't. Because we (the U.S. people) were stupid greedy people took advantage of us. So if you want someone to blame just look into a mirror and see one of the people who decided not to have common sense. Paulson is doing a very good job. If you bought furniture, appliances, and cars on long terms, no money down terms or no interest till 2010 please look into a mirror. Look into a mirror to see the guilty person if you use more than one credit card and don't pay it off every month. Look into a mirror if you do not have a savings account able to keep you going for 6 months.

Like Reply
Morea on Oct 03, 2008
So if you want someone to blame just look into a mirror and see one of the people who decided not to have common sense. This is cute but what about those who play by the rules? Why should they be taxed to pay for those who were greedy/stupid/careless? My proposal is that everyone who is not behind in the mortgage on the house in which they live should get 10% of the remaining loan paid off by the Federal government. Why? 1) Reward those who play by the rules, it will strengthen the country 2) It will inject much needed capital into the markets through a mechanism that will stabilize the system but still penalize the holders of bad debt.

Like Reply