WASHINGTON — As the Senate hearings to determine the feasibility and extent of the federal financial bailout heated up this week, U.S. Sen. Charles "Chuck" Schumer (D-N.Y.) and the American Financial Services Association (AFSA) expressed their support for adding auto loan-backed debt to U.S. Treasury Secretary Henry Paulson's plan.
"As a result of the ripple effect of the credit crunch in the mortgage sector, the ability of finance companies to secure credit lines from investors has been brought to a virtual standstill," AFSA president/CEO Chris Stinebert said in a prepared statement. "Absent intervention by Congress, the ability of domestic manufacturers to finance new motor vehicle sales may come to a halt."
Sen. Schumer told the panel that new-car loans were becoming increasingly difficult to obtain for buyers in the nearprime, nonprime and subprime credit tiers. That could reduce overall sales volume by 35 percent within a year, Schumer explained, threatening jobs in cities and regions that rely on manufacturing and assembly plants for employment.
"Even though the workers in Buffalo and Detroit and St. Louis are blameless, they will suffer," Schumer said.
Though officials from the 'Big Three' automakers declined to comment specifically on the request, GMAC spokesperson Gina Proia said that the lender would be in support of any move that would stabilize markets, according to the Detroit News.
"The American taxpayer is already on the hook," Paulson told a hearing of the Senate Banking, Housing and Urban Affairs Committee. "The best protection for the taxpayer and the first protection for the taxpayer is to have this work."