GM Says Government Should Approve Loans To Detroit 3
It seems that the Detroit Big Three are now in great need of government help. The Detroit-based automakers are seeking about $25 billion in federal loans, in an attempt to ride out a steep downturn in the U.S. auto sales.
Recently, at the Democratic National Convention, Ford executives have announced that the company needs low-interest federal loans from the U.S. government. After this, General Motors Vice Chairman Bob Lutz insisted on the government’s approval of the loans to the Detroit Three. “I do think the American automobile business is deserving of government loan guarantees because the financial institutions in the U.S. are so stressed out right now,” said Lutz.
However, the proposal has not been passed in the White House yet. Reportedly, the lobbyists for the three automakers have briefed the plan to White House officials, but they plan to unveil the proposal after Labor Day.
The plan involves lending of some $25 billion by the federal government to the automakers in the first year, at an interest rate of 4.5 percent, or about one-third what the companies are currently paying to borrow. Under the proposal, the government would have the option of deferring any payment at all for up to five years.
