Henry Payne writes over in The Corner on the question, why don’t the bailed-out banks loan their billions to the automakers?
An excellent point. So I put it to some auto supplier and finance sources, and this is what they say we’re missing: The federal credit bailout ain’t working.
Credit is still frozen. No banks are willing to lend. And the auto companies are still in free fall.
I’m not so sure of this as it relates to the automakers, though. Why should banks loan to the Big Three at this point? As Bob Corker pointed out yesterday during the hearings, the market caps of the Big Three equals about $6 billion combined. Asking the banks to loan money to the Big Three at this point looks a lot like Congress coming up with schemes for banks to loan more money for mortgages. That worked out well.
Corker said there were alternatives but the industry as it stands would have to shrink.
“There’s nobody that I know of that thinks that three companies with the market share that you have, the downward trend that exists, the unsustainable debt that’s out there — there’s nobody, no thinking person thinks that all three companies can survive,” Corker said.
Corker and other senators on Thursday proposed the Chrysler/GM merger scenario and bankruptcy like restructurings as possible conditions for extending bailout loans.