Big Three lobbyists are pushing for the inclusion of auto loan-backed securities in the Treasury Department’s rescue plan, The Wall Street Journal is reporting this morning.
According to the Journal, “So far, Congress hasn’t agreed to include auto-industry finance companies in the bill specifically. Companies are ‘working to make it happen,’ said the auto-industry lobbyist. ‘The finance companies want language to that effect. They feel that if they are going to be included, they should be specifically included.'”
The article did not identify the lobbyists, although the article quotes a GMAC LLC spokeswoman who offered tacit support for the effort, saying, “In general we support any activity that would help bring stability to these markets.”
I have not seen any evidence suggesting that auto assets are anything like the drag on financial services companies that mortgage assets are. While I can understand the need to give Treasury flexibility, this seems to be an inopportune time to be playing what-ifs and grind down the legislative process by adding yet another wrinkle to the bailout.
It appears that Paulson and Bernake are going to get, if not all, most of what they say they need to help the ailing financial markets. If auto finance does not get direct help then my hope is that once the pressure is relieved on a major part of the ailing capital markets we will end up as secondary beneficiaries.
Steve, that’s why I don’t quite understand the logic behind expending lobbying effort on trying to get Congress to include auto finance in the bailout. A revived capital markets would be enough of a benefit to the industry, in my view.
All of the bailout is a huge movement to government involvement in private business – the more of these “pile ons”, the worse this gets. This whole thing is a huge movement to socialization – not a good concept in my mind. Companies and their leaders need to be held accountable for their actions. There has to be something less onerous than what is being pushed forward these days. And how can you make decisions of this magnitude in days when it has been years in the making? Politicians are looking for a quick sugar coated pill.
For the most, unlike mortgage loans, our sub-prime loans met a pre-determined risk/pricing structure along with being rwasonably stipped and verified. If we can get the capital markets open capitalism will pull us through.
All good comments, but don’t forget: three years ago when leasing was subvented by the manufacturers, you could have a $400 monthly payment on a vehicle with a Cap Cost of $45,000. When that lessee goes into a dealership to lease the new version of the same car, the residual drop and lack of subvention causes the new monthly payment to be $700. So the leasing industry is taking a double whammy: lessors tired of losing big bucks and lessees incredulous over current monthly payments, and unwilling to pay them. A real driver (no pun intended) of the 72 and 84 month loan deal.