Remember that we did this as well:
"A $25 Billion Lifeline for GM, Ford, and Chrysler
September 24, 2008 05:45 PM ET | Rick Newman | Permanent Link
In Washington these days, an 11-figure expenditure barely attracts notice.
With Congress preoccupied with the massive, $700 billion bailout plan for the financial industry, General Motors, Ford, and Chrysler have finally secured Part One of their own federal rescue plan. A bill set to be passed by Congress and signed by President Bush as early as this weekend—separate from the controversial Wall Street bailout plan—includes $25 billion in loans for the beleaguered Detroit automakers and several of their suppliers. "It seemed like a lot when we first started pushing this," says Democratic Sen. Debbie Stabenow of Michigan, one of the bill's sponsors. "Suddenly, it seems so small."
But please don't call it a "bailout"—Detroit is too proud for that. Exact details will come later, but the loans would probably amount to at least $5 billion for each of the Detroit 3, plus smaller amounts for suppliers. That would allow them to borrow money at interest rates as low as 4 percent—a steep discount compared with the double-digit rates they're paying now. Over several years, the automakers could save hundreds of millions in financing costs. Plus, they'll have five years before they have to start repaying the loans.
It might seem like a stealth rescue, but the plan has been in the works for at least 18 months. Approval for the loans was first included in last year's Energy Independence Act. Earlier this year, the automakers sought a first installment of loans totaling about $6 billion. But the nationwide credit crunch severely crimped their ability to borrow, and besides, next to bailouts like $200 billion for Fannie Mae and Freddie Mac, a mere $6 billion started to seem unduly modest. So Detroit raised the ante to $25 billion, the most allowed under current law.
Some details of the program:
It's much bigger than the Chrysler bailout of 1980.....
usnews.com
========== We are doing pretty extraordinary things financially including offering both insurance and credit to corporations with lousy credit ratings. They don't get much attention but they appear to add up to much more than the $700 billion toxic debt package.
Now if Congress can put an end to usury in credit cards and install a progressive tax system, maybe we can start to mend the debt problem. Small businesses, arguably the engine of job growth is funding itself on cards...that's nuts.
"February 2008...
new study by the Center for American Progress, a liberal Washington research institution finds that as the credit squeeze has made it more difficult to obtain property-based lines of credit, American consumers are turning to their credit cards as an alternative. VOA's Barry Wood has more.
Credit card debt in the United States has risen to a record $790 billion. The Center for American Progress report finds that credit card debt is currently rising at a rate four times higher than earlier in the decade. The researchers blame the credit squeeze and tighter lending rules by banks that have cut back on the popular home equity loans that are linked to value of the home owned by the borrower.
Tamara Draut is the author of a book on credit card debt.
"One safety valve [for obtaining credit] has shut, the ability to tap equity in your home, because home values have generally fallen and many consumers are now tapped out [borrowed to the limit] anyway," said Tamara Draut.
There is disagreement over just how much money the average American household owes on credit card debt. Most data suggest that about half of credit card holders pay off their balances each month. The study finds that 35 percent of cardholders pay late, thus accumulating penalty fees.
Jonathan Orszag of the University of Southern California says American consumers are woefully uninformed about the high fees and interest rates associated with late payments.
"Financial literacy in America is horrible - that's a simple way to say it," said Jonathan Orszag. "And so we need to start young and get people to understand financial products."
The study says tighter regulation is needed so that consumers will be less confused by enticing offers they don't fully understand. Tamara Draut says current practices operate to the benefit of card issuers.
"There has to be a better balance between borrower education and lender responsibility," she said. "Lenders need to be held to some higher standards. Borrowers have become extremely unprotected while all the rules are tilted in favor of the lender."
Currently, credit card debt on average equals under 9.3 percent of cardholder's disposable income. That ratio has risen of late but is still slightly below the record level of nine point six percent recorded during the recession of 2001." |
