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In the latest move to restore liquidity to the automobile industry, the Michigan Congressional Delegation calls on the Secretary of the Treasury and the Fed Chairman to take the necessary action to protect the domestic auto industry.

Senators and Congressmen call for support of critical industry

Here at Auto Credit Express, we are well aware of the dire circumstances facing the domestic auto industry. That’s one reason why today’s announcement from Senator Carl Levin’s office came as no surprise to us. It is, in fact, an attempt by Michigan’s Senators and Congressmen to make it easier for American consumers to finance a new car.

In a letter addressed to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, the Michigan Congressional Delegation called for both agencies to “take the necessary steps to promote liquidity in the U.S. auto industry in order to protect this critical sector of the economy.”

Here is the press release:

Michigan Delegation Calls on Paulson, Bernanke to Help Restore Liquidity to Auto Industry

Washington, DC – Members of the Michigan Congressional Delegation today sent a letter to Treasury Secretary Hank Paulson and Federal Reserve Board Chairman Ben Bernanke urging the two agencies to use their broad regulatory authority, including the powers granted to them by the Emergency Economic Stabilization Act, to take the necessary steps to promote liquidity in the U.S. auto industry in order to protect this critical sector of the economy.

“The domestic automobile manufacturers face the most difficult conditions they have faced in decades,” said Congressman John D. Dingell. “We need to do something to help unfreeze the credit markets for that industry, as well as all others. The Michigan Delegation is pursuing all options and asking that the Bush Administration – Treasury, Fed, FDIC – also consider all available options.”

“Restoring liquidity to all realms of the U.S. auto industry, particularly for car buyers and dealers, is critical to our nation’s economic recovery, said Congressman Fred Upton. “The U.S. auto industry is a backbone of our economy, and we must do all that is necessary to improve the flow of credit and protect hundreds of thousands of good paying jobs in Michigan and across the nation. Swift action is necessary to not only provide a stabilizing force to our financial markets, but protect American workers.”

“The U.S. auto industry is a major part of our manufacturing and industrial base and it is critically important that the federal government help promote the liquidity needed during tough economic times” said Senator Carl Levin. “The bottom line is that other countries wouldn’t tolerate the erosion of a major sector of their industrial base, and we shouldn’t either.”

“We have reached a critical time in our nation’s economy where a freeze in the credit market has placed the future of our three American auto manufacturers and workers in serious jeopardy,” said Senator Debbie Stabenow. “With one in ten American jobs directly related to the auto industry and vehicle sales having reached a 25-year low, the need for the federal government to support American auto manufacturing has never been greater for the future of our middle class. I am pleased to join with my colleagues in requesting immediate action by Secretary Paulson and Chairman Bernanke, so we can restore the auto industry and keep good-paying jobs in Michigan.”

Congressman Dale E. Kildee, co-chair of the Congressional Automotive Caucus said, “With sales of cars and trucks dropping alarmingly and securing credit for auto loans becoming more difficult, it is imperative that the federal government do whatever it can to alleviate this situation. What America drives, drives America. And our nation’s economy cannot prosper without a healthy and vibrant auto industry.”

“Now is the time for action,” said Congressman Joe Knollenberg. “I’ve been calling on this Administration to step up and aid our auto industry for years. Now, more than ever, they must use all the tools at their disposal to help the Big 3 survive these turbulent and trying times.”

“The Treasury Department needs to recognize the systemic and strategic importance of the automotive sector to the domestic economy and ensure that it is not permanently damaged by the credit crisis,” said Congressman Sander Levin.

“I have received calls from several auto dealers in my district who cannot make payroll,” said Congresswoman Carolyn Cheeks Kilpatrick. “Action must be taken now to help the auto industry and its employees survive during this economic crisis.”

October 23, 2008

The Honorable Henry Paulson
U.S. Department of Treasury
1500 Pennsylvania Ave., NW
Washington DC, 20220
The Honorable Ben Bernanke
Federal Reserve System
20th St. & Constitution Ave., NW
Washington, DC 20551

Dear Secretary Paulson and Chairman Bernanke:

With the enactment of the Emergency Economic Stabilization Act (EESA), Congress provided the Treasury with an array of significant new powers to be used to stabilize financial and capital markets and restore equilibrium to the nation’s economy. There is no single segment of America’s economy that is more critical to the financial well-being of millions of Americans than the automotive industry. One in ten American jobs is related to auto manufacturing.

U.S. auto makers directly employ about 355,000 American workers and through related industries that are dependent on auto manufacturing and sales, the industry supports about another 4,500,000 workers in the U.S. economy. They are among the nation’s largest purchasers of U.S.-manufactured steel, aluminum, iron, copper, plastics, rubber, electronics, and computer chips.

The three U.S. auto manufacturers provide health care to almost two million Americans and pay pension benefits to 775,000 retirees or their survivors. The disappearance of liquidity in credit markets, if not relieved in coming weeks, threatens to cripple these industries and the communities in which they operate.

Every segment of the U.S. automotive industry – automobile manufacturers, dealers that are engaged in sales of autos and light-duty trucks, and auto finance companies that provide financing to dealers and to consumer and commercial purchasers of vehicles – is experiencing devastating effects that have resulted from the worldwide crisis in financial and capital markets and the freeze-up in credit markets.

Historically, more than 94 percent of new vehicles sold to consumers in the U.S. have been purchased with financing. With the seizing up of credit markets, financing is not available for consumers seeking to buy or lease cars, nor is it available for dealers to purchase inventory. These circumstances have dramatically depressed vehicle sales, and declining sales put at risk not only auto manufacturers, but the widespread network of suppliers, vendors, and other peripheral businesses that provide goods and services to them. New vehicle sales in the United States fell 26.6 percent in September, and are expected to fall by 30 percent in October, bringing the industry to an annualized rate of 11 million vehicles, the lowest since 1983.

In this current economic environment it is imperative that the government ensures that liquidity is restored so that the U.S. auto industry is able to function until normalcy is restored to credit markets. We urge you to use your broad regulatory authority including the powers granted to you by EESA to take the necessary steps to promote liquidity in the U.S. auto industry in order to protect this critical sector of the economy.

Sincerely,
Senator Carl Levin
Senator Debbie Stabenow
Congressman John D. Dingell
Congressman Fred Upton
Congressman John Conyers
Congressman Dale Kildee
Congressman Sander Levin
Congressman Dave Camp
Congressman Pete Hoekstra
Congressman Joe Knollenberg
Congressman Bart Stupak
Congressman Vern Ehlers
Congresswoman Carolyn Cheeks Kilpatrick
Congressman Mike Rogers
Congressman Thad McCotter
Congresswoman Candice Miller

The Bottom Line

You can point fingers and debate about the various reasons for the downfall of the domestic auto industry until the cows come home. But the fact remains that the auto industry is vital to the economic well-being of millions of Americans. Any effort to restore consumer confidence and prop up auto sales is, in our book, welcome – especially in a state that has been in a recession for the past three years.

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