Auto loans industry may take up to 18 months
WASHINGTON — Loans for automakers and parts suppliers from a $25-billion pool expected to pass Congress this week might not reach the industry for six to 18 months, the U.S. Department of Energy said Thursday.
That timing goes against the wishes of Michigan lawmakers, who had hoped to see loans begin flowing by the end of this year.
Detroit automakers are facing a cash crunch that is expected to last through 2010, and lawmakers added requirements to the loan program this week to speed the process of handing out funds.
Under the bill, the DOE must write the rules for the loans within 60 days of the bill becoming law. But DOE spokeswoman Healy Baumgardner said Thursday that the agency had “significant doubts about whether distribution of loans by January 2009 is realistic.”
“Because there are a number of legal and administrative requirements with which the department must comply, such as the National Environmental Policy Act, we anticipate it could take at least six to 18 months or more” before loans are granted.
The House approved the loans on Wednesday as part of a $600-billion budget bill that will keep the government running through March. Senate leaders said Thursday that they won’t consider the bill until Saturday.
Rep. John Dingell, a Dearborn Democrat, said in a statement that the agency was “making excuses for its own anticipated failures,” adding that “I hope this statement is not a sign of continued indifference to the U.S. auto industry on the part of the Bush administration in its waning days.”
Wall Street firms have estimated that the loans could sharply reduce the cash needs of General Motors Corp. in 2009, and at Chrysler LLC to a lesser degree, while also helping dozens of suppliers.
While the industry lobbied hard to speed the loans, it failed to win changes to the program allowing the money to be used on a wider variety of new vehicles and parts. Under the loan rules, only vehicles that get 25% better fuel economy than their competitors can qualify for aid.
GM Chairman Rick Wagoner said he hoped the regulations for the loans would be written as broadly as possible for automakers and suppliers.
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Tags: Auto Loans