WASHINGTON -- Auto dealers struggling to finance inventories got some potential good news today.
A key lawmaker signaled that he wants Congress to make clear in law that lenders receiving federal rescue money have a responsibility to provide loans for dealer floorplans and for vehicle buyers.
House Financial Services Committee Chairman Barney Frank, D-Mass., today unveiled draft legislation to overhaul the governments $700 billion rescue program for financial institutions.
We are encouraged by the specific references to floorplan, said David Regan, vice president for legislative affairs of the National Automobile Dealers Association.
NADA lobbyists will work with lawmakers and congressional staffs to refine the legislation, he said. Many are unfamiliar with the critical nature of floorplan financing to the automobile business, Regan added.
An overhaul bill, likely based on Franks draft, will be considered soon.
When Congress approved the $700 billion fund in October, it released just half the money, forcing the Treasury Department to come back for approval of the second $350 billion.
Treasury has committed more than $350 billion so far, including $17.4 billion in emergency loans for General Motors and Chrysler LLC. So a request for the second $350 billion will be necessary soon, either by the Bush administration or, after Jan. 20, by the Obama administration.
Lawmakers see the request as an opportunity to revise the program. Many want to force lenders getting aid to better disclose how they use the money, to increase loans to consumers and to reduce home foreclosures.
Besides the dealer-specific provisions, Franks draft has a section that clarifies and confirms Treasury authorization to provide assistance to automobile manufacturers and another that clarifies Treasurys authority to provide support to the financing arms of automakers.
Franks bill is likely to undergo extensive changes before reaching the presidents desk.
Regan of NADA described the legislation as an attempt at a tighter statutory framework for the disbursement of federal rescue funds.
Frank's bill would also create a "car czar" to oversee the U.S. auto industry, Reuters reported.
The car czar job was originally in an auto industry bailout bill approved several weeks ago by the House of Representatives but rejected by the Senate. Ultimately, the Bush administration bailed out Detroit automakers with $17.4 billion in emergency loans to try to avoid a collapse that would cost cost hundreds of thousands of jobs.