Auto workers and automakers alike will be breathing a sigh of relief today as the House approved a $25 billion loan package that will be available to automakers and suppliers. The low-interest government loans will be available to any automaker or supplier with operations in the U.S., but the loans must be used exclusively for the production of more fuel-efficient vehicles.
The House of Representatives passed the vote on Wednesday by a margin of 370 to 58, with an initial amount of $7.5 billion to be set aside to get the program started, according to Automotive News. The Senate is expected to pass the bill next week, with President Bush expected to sign the bill into law shortly after.
The loan program was actually enacted last December with the passing of new CAFE regulations, but the bill did not have the authority to put the $25 billion loan program into action.
The approval of the bill will be most advantageous to the domestic automakers, who are struggling to convert truck and SUV factories to produce more fuel efficient small cars. The Federal loans should also secure more jobs in the auto sector, which is a bit of good news in an otherwise down time.
Despite the appearance of a bailout, the House Energy and Commerce Committee emphasizes that the loans are not intended to be a bailout for the auto industry. “Some critics will call this loan package a bailout,†Rep. John Dingell, D-Mich., chairman of the House Energy and Commerce Committee, said. “It is not.†He continued: “The auto direct-loan package is a good deal for auto workers and a good deal for taxpayers.”
Whatever you want to call the loan package, it should be a major boost to the Big Three.
