WASHINGTON, Oct 14 (Reuters) – The U.S. government’s $700 billion market rescue plan could assist automakers such as General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) by buying up distressed auto loans, a top lawmaker said on Tuesday.
“Under the buying up of assets, they could buy up automobile loans,” said Barney Frank, a Massachusetts Democrat who chairs the House Financial Services Committee.
Frank also said U.S. banks receiving capital injections under a U.S. Treasury plan to infuse $250 billion into the troubled sector are expected to use the funds to support lending activities.
First, there will be the bailouts. Once upon a time, there were concerns about moral hazard. But resistance to corporate bailouts is gone. If Bear Stearns and A.I.G. can get bailouts, then so can car companies, airlines and other corporations with direct links to Main Street.
And Henry Payne’s piece yesterday on NRO suggests that an auto-insurance bailout might become an issue in Michigan’s 9th Congressional District. An excerpt:
Facing left-wing Democrat Gary Peters, [GOP Congressman Joe] Knollenberg is in the fight of his life just three weeks before Election Day. . . .
Democrat Peters, a former state senator, is best known for railing against “red-lining” – that race-baiting pejorative that liberal Democrats used to employ so frequently to strong-arm businesses into making risky loans. [You don’t hear Democrats complaining about mortgage red-lining anymore: Peters’ bugaboo is auto-insurance red-lining.]