Pelosi, Reid Urge government to support to auto industry

Detroit, November 9: The House speaker, Nancy Pelosi of California, and the Senate majority leader, Harry Reid of Nevada pushed the government to use the $700 billion bailout meant for the financial sector for the ailing auto industry.

In a communication to Treasury Secretary Henry M. Paulson Jr., the democratic leaders urged, "A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy and the livelihood of the automobile sector’s workforce."

Pelosi had met the chief executive officers of General Motors Corp., Ford Motor Co. and Chrysler LLC a couple of days back. The three auto behemoths are seeking $50 billion in federal loans to tide over the current crisis.

The lawmakers averred that the auto industry is eligible for federal financing under the $700 billion Troubled Asset Relief Program. Treasury spokeswoman Brookly McLaughlin replied, "We continue to work on a strategy that most effectively deploys the remaining TARP funds to strengthen the financial system and get lending going again."

Detroit’s ‘big three’ automakers are a battered lot as the entire auto industry finds itself in a quagmire. Unless government assistance pours in General Motors is likely to run out of cash by mid-2009. Its probable merger with Chrysler has already been called off for the time being.

Chrysler and Ford too are reeling under intense pressure due to the shattered economy, tight credit norms and sky rocketing oil prices. The auto makers are of the opinion that the $25 billion that the congress approved as aid for the auto manufacturers is just not enough.

The missive also states that the lawmakers are "convinced that our nation’s automobile industry — the heart of our manufacturing sector — and the jobs of tens of thousands of American workers are at risk. Friday’s news of the automobile industry’s record low sales figures only reaffirms the need for urgent action."

The figures cry for urgent attention and action. Put together, these three automakers suffered a loss of $28.6 billion in the first six months of the year. Car sales fell by 18 percent last quarter and a whopping 32 percent last month. Analysts feel that this crisis is the worst in 26 years.