Democratic congressional leaders urged Treasury Secretary Henry Paulson to use the $700 billion financial-rescue package approved last month to lend to U.S. automakers.
House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid sent a letter to Paulson yesterday saying the rescue bill gives him “broad discretion to purchase, or make commitments to purchase, financial instruments you determine necessary to restore financial-market stability.”
Pelosi was among the lawmakers who met last week with the chief executives of General Motors Corp., Ford Motor Co. and Chrysler LLC. The three companies are seeking $50 billion in federal loans to help them weather the worst auto market in 25 years, according to a person familiar with the matter.
The letter increases pressure on the administration of George W. Bush to take action as he prepares to hand power to President-elect Barack Obama on Jan. 20. Obama said last week that policy options to help the industry will be a “high priority” for his transition team.
(Article continues below)
“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 and Reid said in their letter.
- A d v e r t i s e m e n t
They argued that the industry may qualify for federal financing under the $700 billion Troubled Asset Relief Program, originally intended to buy bad loans from lenders and broadened to include purchases of equity stakes. Paulson has set aside $250 billion to buy stakes in U.S. financial companies.
“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,” Treasury spokeswoman Brookly McLaughlin said yesterday in response to the lawmakers’ letter.