United States Federal Reserve Chairman Ben Bernanke wrote that he is reluctant to utilize the Fed’s emergency lending program to help out struggling Detroit automakers. In a letter to Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, Bernanke suggested that any decision on funding come from Congress.
“The Federal Reserve would be extremely reluctant to extend credit where Congress has actively considered providing assistance, but after due consideration, has decided not to act,” Bernanke wrote to Dodd in the letter, which was dated December 5 but was released earlier today.
“It is unclear whether the auto manufacturers have unencumbered assets of sufficient amount and quality to meet this requirement,” Bernanke continued, expressing some concern over the collateral the automakers could provide in exchange for the loans.
Bernanke called the potential of using Fed money a “marked departure” from the emergency program.
“It would raise the question as to whether the Federal Reserve should be involved in industrial policy, which has traditionally been outside the range of our responsibilities,” he wrote. “Our view is that questions of industrial policy are best resolved by Congress.”
