Democratic Congressional leaders said on Tuesday they intend to support U.S. auto companies with at least $25 billion in low interest loans, according to a Reuters report.
The funds would be offered to help General Motors Corp (NYSE: GM), Ford Motor Corp. (NYSE: F) and Chrysler LLC (CBS.UL) retool factories to make more fuel efficient vehicles and increase battery research for plug-in vehicles.
These domestic companies have suffered major losses as their core business in sport utility vehicles and trucks has collapsed under the weight of increased fuel prices.
It’s unclear whether legislators will be able to push a program through the political process before they break at the end of the month, but that appears to be their intention, based on the report.
The White House has yet to comment officially on the issue, but in the past, the Bush administration has resisted any "bailouts" for the auto industry, which is at risk of losing the race to develop alternative vehicles to Japanese car companies.
U.S. auto companies say funding would not be a bailout, because they are not at risk of going out of business, but rather that they need access to additional funds to meet governent mandates for increased fuel efficiency.
$25 billion in government-backed lonas would cost taxpayers roughly $3.8 billion, and automakers would like to double the amount of available credit to $50 billion, which would raise the congressional outlay to roughly $7 billion, House of Representatives Speaker Nancy Pelosi said, according to Reuters.
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