Michigan lawmakers asked the government on Thursday to make it easier for car buyers to get loans, in hopes of helping U.S. automakers ride out the financial crisis.
The state’s congressional delegation want Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to use their powers under the $700 billion bailout to buy troubled assets quickly from auto finance companies.
Democratic Rep. John Dingell also said automakers were considering asking the Fed for access to a program that provides low-cost credit.
“We are not ashamed to point out that this crisis that we have on credit did not begin in the auto industry, it began in the financial industry,” Dingell said.
Dingell, a longtime advocate in Congress for automakers, declined comment on whether the financial crisis could lead to a bankruptcy filing by any of the Detroit Three — General Motors Corp., Chrysler LLC or Ford Motor Co.
“The situation is very serious with regard to all three of the manufacturing companies,” Dingell said. The situation is equally serious for auto suppliers and dealerships, he added.
In their letter to Paulson and Bernanke, the lawmakers said the lack of liquidity in credit markets could cripple the auto industry. Many banks and auto finance companies have tightened credit standards because they cannot borrow money to lend or they have been reluctant to lend and risk defaults.
“They need to do for autos what they’re doing for the mortgage industry,” said Sen. Carl Levin, D-Mich.
GM spokesman Greg Martin said the government “should consider all of its tools, some recently enacted, to support industries that are in distress.” He said GM continues to “keep all of our options open” but would not discuss any talks GM may have had with the government.
Ford spokesman Mike Moran said “well functioning credit markets are vital for the entire industry including dealers and suppliers.”
The lawmakers said they may try to expedite the availability of $25 billion in low-interest loans approved by Congress last month. Levin has said he may try to double the loan amount, which would help the industry retool plants and build fuel-efficient vehicles.