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Frank, Dodd speak on possible auto deal

Posted by Foon Rhee, deputy national political editor December 8, 2008 01:20 PM

The two New England lawmakers who presided over hearings last week on federal aid for the auto industry said today that while it's not their ideal choice, they're in favor of taking money from an already-approved $25 billion fund to help US automakers retool to build fuel-efficient vehicles.

But they said they expect that money to be replenished soon after President-elect Barack Obama takes office.

"But in the interim, we will be extending loans, the federal government will be protected," Representative Barney Frank of Massachusetts, chairman of the House Financial Services Committee, said on CNBC.

"It will be a very high degree of assurance that we'll be paid back. There will be requirements that they begin soon to do the restructuring that people think is necessary. And it will probably be enough money to get them until March. And the reason for that is you then get the new administration, the Obama administration, able to take it up from there and make longer range projections."

Senator Chris Dodd of Connecticut, chairman of the Senate Banking Committee, said on MSNBC that it would only take $7 billion of the $25 billion already approved to leverage $15 billion in loans.

"This is a literally, a bridge," Dodd said. "I know people don't like that analogy, but if we don't provide some funding in the next few days, literally we could be looking at an industry that no longer exists come early January. So we need to be in a position to be able to get to the point of restructuring this industry almost from top to bottom. And what we're trying to do is provide the funding that will allow us to do it."

The White House said today that it was "very likely" to reach a deal with congressional leaders, but asked for more details on the proposal.

"It sounds like we have agreement on those basic principles that would be required for a bill that the president could sign," White House press secretary Dana Perino told reporters.

House Speaker Nancy Pelosi, responding to a report of more than 500,000 lost jobs last month, broke the logjam on Friday by agreeing to dip into the fuel-efficient vehicle money.

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I don't "get it". They are treating the automakers differently than they did the "Fat Cats" at Wall Street, which got their billions without any strings attached. Yet the auto industry should have been a priority for getting a bail-out since they are keeping thousands upon thousands of "regular folks" employed since they are employed directly and indirectly in the making of cars. Something is wrong with the whole big picture......did Wall Street contribute bigger bucks to all these legislators? Is that why they received the bailout without any strings attached??

Posted by Bobbie December 8, 08 02:04 PM
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As long as UAW workers don't get paid to stay home. It makes me nervous when Barny Frank likes it it's unsettling. At least we know where "special retirement plans" for public sector got their ideas...the UAW!

Posted by XENOPHON December 8, 08 02:41 PM
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I'm afraid it's because the the financials can actually make money with the money they get, while the auto manufacturers will only make goods. These goods will depreciate rapidly too after purchase. Now, with this in mind, you'd think the financials would have had their acts together and not wrapped up all their "money" in ridiculous instruments.

Posted by JohnEK-1 December 8, 08 02:42 PM
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In 2011, the Detroit car makers will have a lower hourly wage cost than their southern competitors because they will no longer be responsible for their employees health care.

Financial companies make money by taking money from the rest of the population by doing nothing that helps their customer but does relieve the anxiety that they help to create. Asset allocation is an invention of the financial service industry. Everyone believes that they have to be diversified among many asset classes to be properly risk protected. Hedge funds are a manifestation of that self serving advice. The only thing out of the ordinary about this investment is the profits that the financial service industry makes on the sale of their product. Performance has been mediocre in most cases and liquidity is a problem.

Most financial service products are overpriced and the fees they charge have no economic basis. The charge for an overdraft is extortion as is a late fee on the credit card payment. What we need to rethink in this country is our use of the financial service industry and they need to be regulated as to their ability to charge fees. Children need to have a financial education so that they realize as adults that if you buy insurance you are not getting your moneys worth because you are paying for the overhead of that product which in many cases is more than a quarter of the cost. If the analogy of insurance to gambling were made where the pay off is 75 cents for a dollar, the use of these products in most cases would only be limited to those who can afford extravagance.

Posted by Ron M December 8, 08 04:00 PM
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Welcome Bailout Administration bye bye Bowout One.

Posted by skmj December 8, 08 07:02 PM
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