House Approves Bridge Loan for Ailing Auto IndustryDecember 10, 2008

Washington, D.C. Today, the House of Representatives passed H.R. 7321, the Auto Industry Financing and Restructuring Act, to provide necessary loans to struggling American auto-makers.

"We are in no position to equivocate in our support for American jobs during an economic crisis, plain and simple," said Congressman Lincoln Davis.

Under the bill, the Congress may provide approximately $14 billion to Chrysler, Ford and General Motors to help them stay afloat. The loans have a term of seven years, and come with provisions that address the issues of privately owned auto-makers and executive compensation. In return, By March of 2009, the auto-makers must submit a detailed plan on how they will achieve long-term viability. The bill requires the President to designate one or more persons to carry out the Act, which includes overseeing the restructuring of the auto-makers.

"This bridge loan isn't just for the Big Three, it's for the men and women putting in their time on the factory floor," Davis said. "This directly impacts the several factories in the Fourth Congressional District that are parts suppliers, dealers and other indirect employees of the auto industry, including those associated with Nissan, Volkswagen, and other manufacturers in Tennessee and across the country." Both General Motors and Nissan have production facilities in Tennessee's Fourth District.

Earlier this year, Congressman Davis voted against the $700 billion bailout for the financial services industry. This legislation is different for two significant reasons. First, the funding in this bill goes to support an industry that has long supported hardworking, middle class Americans, rather than sending money to those who built extraordinary wealth for very few. In effect, this legislation addresses an acute symptom of the economic crisis, rather than rewarding its main contributors.

Second, the bridge loan is simply that: a loan. Whereas the $700 billion financial services bailout bought preferred stock with no guarantee of repayment, today's auto bridge loan must be repaid within seven years.

As reported by the Nashville Business Journal, Tennessee could lose as many as 106,000 automotive jobs, both union and non-union, in the event of a domestic auto-industry failure. Foreign auto-maker Volkswagen, which is not eligible for bridge loan funds, announced its support for the program earlier this week.

Tennessee is one of seven states in which motor vehicle parts manufacturers are the largest manufacturing employers. The state's unemployment rate currently hovers around 7%.