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Paulson: No funds for auto makers
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AP Photo/Evan Vucci
Treasury Secretary Hank Paulson will not give money to the nation’s troubled auto makers. Paulson, speaking before the House Financial Services Committee onCapitol Hill, said the auto industry falls outside the original purpose of the 700 billion dollar bank bailout bill passed by congress just a month ago.
Recently Democrats have been calling for a hefty chunk of the federal funds to go to Detroit. They would like to see as much as 25 billion pumped into the auto industry immediately. The most obvious reason Democrats would like the auto injection; dolling out money to the three largest automakers will save tens of thousands of jobs as we enter the holiday season. Most republicans want to see a separate bill drawn up for car companies. Paulson obviously agrees with them.
Paulson went on to say the bank bailout money was “not intended to go to plumbing contactors and others who have applied” for it. Instead, Paulson says the federal funds will be used to stabilize banking institutions so that they will look good on the books to other banks and the institutions will start lending money and stop hording it.
But committee chairman Barney Frank reminded both Paulson and Federal Reserve Chairman Ben Bernanke that the funds approved by congress were intended to buy troubled bank assets, especially faltering home mortgages. Frank says Paulson’s decision last week to no longer help out homeowners is missing the root of the crisis.
Paulson says the bank bailout funds cannot reverse the damage already done. He says allowing the economy to continue to move slowly will not help the housing crisis. Instead he insists helping healthy banks is the way to move forward and will also provide a more stable market for the incoming presidential administration.
Despite the sour news on Capitol Hill, the Dow remained positive. At one time the Dow was up 120 points in the morning session.
For more info: http://www.cbsnews.com/stories/2008/11/18/business/main4613091.shtml?tag=topStory;topStoryHeadline
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