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Congressman Wants Loan Guarantees for U.S. Automakers

Loans Would Finance Development of High-Mileage Vehicles

By Joe Benton
ConsumerAffairs.com

September 21, 2006

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A Michigan Congressman plans to introduce a bill to give Detroit automakers federal loan guarantees to speed the development of more fuel-efficient vehicles.

Rep. Mike Rogers (R-Mich.) will introduce a bill to give domestic automakers inexpensive access to capital to bankroll faster development of hybrid engines, ethanol-powered vehicles and cleaner diesel engines.

"This isn't a free pass for them to avoid painful decisions or restructuring," Rogers told the Detroit News. "This is a chance for the automakers to compete on a fair playing field with access to the credit markets."

While the bill would save Detroit's Big Three hundreds of millions of dollars in borrowing costs, Rogers insists it is not a bail-out of the domestic auto industry.

Both Ford and General Motors have been hurt by credit ratings that have sunk to junk bond status, raising their cost of borrowing. Ford's credit ratings were cut further Tuesday by two of the major rating agencies.

The three automakers were receptive to Rep. Rogers' proposal, welcoming the support that could possibly save them hundreds of millions of dollars in borrowing costs, the News said.

"We find it encouraging that there is support from Congress to accelerate green technology," Ford spokesman Mike Moran said.

U.S. automakers have lagged far behind their Japanese rivals in the development and introduction of hybrid gas and electric cars. The Big Three instead are working on "flex fuel" vehicle technology that can burn either gasoline or an 85-percent ethanol fuel made from renewable sources such as corn or sugar.

The Big Three are also exploring new diesel technology that will meet tougher U.S. emission standards.

An earlier measure sponsored by Rogers would boost the distribution system for ethanol and other renewable fuels. That bill has passed the House and awaits Senate action.

"Renewable fuels such as ethanol help Michigan by making fuel for our vehicles more affordable and doing a better job of protecting our environment. I believe all of us would prefer to pay American farmers and renewable fuel producers, instead of an Iranian Ayatollah, for the fuel that drives our economy," Rogers said.

"Every step we take to increase our use of renewable, American-grown and produced fuel takes us further away from our dependence on foreign oil and lays the foundation for a stronger economy and cleaner environment in Michigan and the nation."

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