Wednesday, November 12, 2008

Henry Paulson: Rescue package not for automakers

David Shepardson / Detroit News Washington Bureau
WASHINGTON -- Treasury Secretary Henry Paulson said Wednesday he would move to open up the auto financing market, saying he favors rewriting the rules overseeing a $25 billion retooling loan program for Detroit's Big Three automakers to speed aid.

But Paulson again said he didn't think $25 billion in emergency bridge financing for automakers should from the $700 billion Wall Street rescue package, or Troubled Asset Recovery Program. "We need a solution, but the solution has got to be one that leads to viability," Paulson said at a press conference today. "The intent of the TARP was to deal with the financial industry."

He noted that auto finance activity has virtually seized up.

"Approximately 40 percent of U.S. consumer credit is provided through securitization of credit card receivables, auto loans and student loans and similar products. This market, which is vital for lending and growth, has for all practical purposes ground to a halt," Paulson said. "Addressing these two priorities will have powerful impacts on the overall financial system, the strength of our financial institutions and the availability of consumer credit. Third, we continue to explore ways to reduce the risk of foreclosure."

On Friday, President-elect Barack Obama urged Congress to speed the $25 billion retooling loans. Automakers are concerned that they won't pass the financial viability test to qualify for the loans.....More

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