• Sep 24th 2008 at 5:45PM
  • 68
The U.S. House of Representatives passed a bill this afternoon approving a $25 billion low-interest loan for domestic automakers. The bill passed with an overwhelming majority – 370 to 58 – and is on its way to the Senate for a vote on Friday before the White House gets the opportunity to lay pen to paper on March 6, 2009. The rates and rules of the loan are required to be spelled-out by the U.S. Department of Energy within 60 days of the bill becoming law, but automakers could be allowed to repay the loans over as long as 25 years, along with the Energy Department deferring payment for up to five years.
Detroit's Big Three (or 2.8, or whatever) are counting on the loans to retool factories for more fuel-efficient vehicles, protect jobs and help fund the escalated development costs of fuel-efficient drivetrains. Having seen more government bail-outs than we'd like to over the past couple weeks, we're not ready to call this one a full-blown bail-out like those given to Fanny Mae/Freddie Mac, and AIG. These are low-interest loans that will likely come with specific stipulations on how the money can be spent. It's up to General Motors, FoMoCo and Chrysler LLC to spend them wisely.

[Source: Automotive News - Sub. Req.]

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    • 1 Second Ago
      • 7 Years Ago
      "Japanese cars are better? Don't U mean Honda's and Toyota's are better. Cause those other makes sure aren't"

      If I were to buy a Japanese car, make mine a Honda or Mazda.
      Toyota sucks.
      • 7 Years Ago
      So by 'protect jobs' what they really mean is 'offer compensation packages for employees'.

      They'll send many employees to early retirement now so they'll have less overhead later.

      In theory, they'll pay off the loan faster that way. In practice it'll turn into a bailout.
      • 7 Years Ago
      re loan: if these large American corporations cannot find banks willing to lend them the money they "need", why should our government do so? I don't want to see one of these companies go out of business, but I also don't want us to prop up a money-losing, outdated, non-competitive company, just because of their size and perceived importance to the economy.

      • 7 Years Ago
      umm...Lehman Brothers didn't get bailed out...it filed for bankrupacy and is being sold off piece by piece to other companies around the world
        • 7 Years Ago
        Yeah it's rather sad how clueless that statement was. Autoblog's apparently edited it after realizing how retarded it is to claim that a bankrupt company that received $0 in bailouts got a better deal than the auto industry, lol.
        Too bad the sentence they have left is still equally ridiculous, since AIG got an $85 billion loan, but that loan has an 11.5% interest rate (that will likely go up since it's based on LIBOR+8.5%) plus an up front 2% fee on top of that, plus the government gets to take 80% of the company's equity. Which makes it about the worst possible loan ever to have existed in the universe.
        That article should let you know pretty clearly that the auto makers are getting a much, much nicer bailout loan than AIG is getting. AIG's loan is basically forcing them to either sell off almost the whole company to pay off the loan.
        And Fannie Mae and Freddie Mac didn't get much better deals...they were both just seized by the US government, leaving shareholders with virtually worthless stock.
        How you could think that government seizure of your company, or a super-high interest rate loan where the government will also take 80% of your company, is a better bailout than super low interest rate loans for decades is beyond me.
      • 7 Years Ago
      2 million Mexican jobs or would that be Korean jobs?
      • 7 Years Ago
      March 6? That's mah birfday.
      I want a $25 billion check for my birthday >: (
      • 7 Years Ago
      So if I make stupid decisions with my money, can I get a second chance too? It's only fair right?
        • 7 Years Ago
        Big corporations can apply for bankruptcy as well. I believe Lehman Bros. filed for the biggest one in history last week.
        • 7 Years Ago
        Obviously no, but the point was not what is better for everyone it's that they squandered their opportunities and their money to make a quick buck and now that it's backfired and they are failing the government is bailing them out.
        • 7 Years Ago
        So what happened to their 25,000 employees? Are they in happy land?
        • 7 Years Ago
        Umm...Actually you can, its called declaring personal bankruptcy. But that doesn't work for corporations.
      • 7 Years Ago

      Remember British Leyland?
      • 7 Years Ago
      Yay!!!!! The Free Market strikes again.

      "Wait what? loans to retool factories for more fuel-efficient vehicles, protect jobs and help fund the escalated development costs of fuel-efficient drivetrains".

      Thats so cool don't plan for the changing future just get low interest loans from unkle sam when u realize that the game has changed and u are not ready to play.

      Free market my ass.
        • 7 Years Ago
        When you talk about "free market" you are not correct when it come to Japanese cars. Japan has a totalitarian economic system. The government is EXTREMELY involved with those car companies. Honda, in fact volated the government when it went beyond its mandate to build "engines and motorcycles" and even today has almost no market share in Japan when it comes to cars.

        With the Prius .. wonder why the Honda version looks almost identical ... wonder where that technology came from. Toyota would be upset, but Toyota did not pay for the technology either -- oh Papa Bear did.
        • 7 Years Ago
        you're a clown if you think that the US govt hasn't supported the big three in years past. Not saying that it has supported them as much as germany or japan has supported their respective mftrs...but to assume that the govt hasn't supported the B3 is naive at best. think about it, its in the best interest of the US economy that those 3 huge US firms are successful, if they're not its B-A-D news for the US.
        • 7 Years Ago
        Thanks for answering my comments. We do not see eye to eye, it seems , but we have to realize that what is going on in USA is the result of the "Laissez-Faire" policies of many past administrations. It just does not make sense to loose:
        -Even golf clubs
        -Plastic jars

        A country without factories looses the know-how to do things. The new economy failed with the tech bubble, and failed again with the service economy (finance).

        Why don't we let everything go; it would be simpler and we would not need as many MBA's. Harvard could be transformed as a training center for Wall-MArt or Mc Donald.

        By the way, I am happy that your father work for a truck corporation. At least, he built real products for real businesses which I hope will still be around in the 21st century.
        • 7 Years Ago
        Take a look at the business world, they all talk about free markets. Nobody practices the free market. The corporate world are all socialists. The tax payer PAYS!
        • 7 Years Ago
        Umm, the problems with Freddy and Fannie just show that the gov't has no business mandating how markets work.
      • 7 Years Ago
      Shortsightedness starts at home.

      Stop blaming corporations for their failings, all of us have contributed to our national fiscal ailment by taking out too many loans, buying too many things on credit, and driving poor MPG vehicles.

      I could give a rat's ass who built what, we all bought in, and we never stopped to smell the burning motor oil. I for one would prefer the American companies stick around, and make some competitive and interesting cars of quality, but I won't be spending my hard-earned cash on anything unreliable... which is why I don't drive a German car, either.

      We need to stop the finger waving, and the pointless rants. If you really give a s**t where your future is headed, start doing something! Our school systems suck, our healthcare industry is a mess, and our auto industry lumbers on because people are willing to purchase crap just to feel good about the name on the hood. STOP! Open your frickin eyes people! Quit yer bitchin, pay off those credit cards, and start thinking about life further ahead!
        • 7 Years Ago
        btw, keep on with the pointless rants... i included that in their as a bit of a joke :P
      • 7 Years Ago
      So I'm in debt and haven't planned for the future properly like I should have... where's my low interest loan from the government?
        • 7 Years Ago
        I'm really suprised at the amount of ignorance in these comments. It doesn't matter what you think of the Big 3... the American economy depends on their survival.

        Sure these companies have been mismanaged, so it's easy to say they had it coming... but the hundreds of thousands of people who stand to lose their jobs didn't have it coming as they didn't make the managerial decisions.

        But the impact spreads far beyond Big 3 employees. It is estimated that 1 in 10 jobs in this country is associated with the auto industry. If the Big 3 go under, so do suppliers and thousands of dealerships. And what about ad agencies like Campbell Ewald who rely heavily on auto companies for revenue? What about shipping companies that import parts and vehicles for the Big 3? What about the companies contracted for janitorial work, lawn care, and snow removal at Big 3 facilities? What about restaurants, shops, hotels, etc located near Big 3 facilities?

        And when all those people lose their jobs, they won't have money to spend at the places they usually spend their money at.

        But wait, there's more...

        We all know our financial institutions our in horrendous shape. Did any of you stop to wonder why our financial institutions were lobbying the government to give these loans to the big 3? For those who can't figure it out, those same institutions have loaned billions to the Big 3. They can't afford the Big 3 to default on those loans, and they surely can't afford for people who would lose their jobs as a result of a Big 3 collapse defaulting on their loans and mortgages. If the Big 3 collapse, they will take banks down with them.

        Quit bitching about how it's YOUR tax money going to these companies and realize that the economic fallout from a collapse of the Big 3 would cost you far more.

        And also, most countries provide grants to private companies for research and technological innovation. Case in point, Japan funded the development of the Prius for Toyota. The US govt also used to fund research for the Big 3 to make more efficient vehicles, but Cowboy Bush cut that funding. So you could almost view this as our government making up for the funding they should have been giving for the last 8 years and not a bailout.
        • 7 Years Ago
        Yeah but you don't employ hundreds of thousands of people. You also don't support local economies like the Big 3 do.
      • 6 Years Ago
      If General Motors goes under, not only will 3 million direct and indirect jobs be lost ballooning the unemployment rate to 10%, the suppliers will cease to provide critical parts to all automakers operating factories in the United States, including Toyota and Honda.

      Why should American auto companies be "blamed" for legacy costs associated with taking care of American families with retiree health care and pension? True, American auto companies built a lot of SUVs and trucks in the 90s, but what kind of American Dream blames a company for going after profit? The spike in oil prices earlier this year, and the credit crisis of the present are out of the control of the automakers.

      In addition, General Motors has redeemed its mistake for not producing a vehicle similar to the Prius in the 90’s by promising to introduce a revolutionary electric vehicle in November 2010, which will not only be a game-changer for the industry, but will alleviate America’s dependence on foreign oil, which inevitably funds terrorism. Regular, transparent updates from the company make our country very confident that this electric vehicle will become a reality by that time. Let’s support America.
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