WASHINGTON — The largest federal aid ever offered to the U.S. auto industry passed the Senate today, as a $25-billion loan program won final approval from Congress after a three-month industry blitz.
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The loans were part of a $630-billion budget bill that will keep the government running through March. Automakers lobbied hard to get the provision on the bill, the only must-pass piece of legislation that Congress considered this month.
The vote was 78-12. President George W. Bush is expected to sign the bill.
Industry officials say the loans will help them retool factories to build more efficient models, such as the Chevrolet Volt. Wall Street firms have estimated that the loans could also sharply reduce the cash needs of General Motors Corp. in 2009 and at Chrysler LLC to a lesser degree.
Detroit automakers will burn through billons of dollars in cash this year, thanks to a downturn that’s expected to last through 2010. While lawmakers added requirements to the loans to speed the process of handing out money, the U.S. Department of Energy warned this week the process could take up to 18 months after the bill is signed.
Michigan lawmakers have vowed to pressure the Bush administration and its successor to move far more quickly.
Under the bill, the loans will be made at rates close to what the Treasury borrows, with roughly 5% interest, rather than the 15% to 20% rate that automakers and suppliers can get today.
The industry lobbied hard to speed the loans, but it failed to win changes to the program allowing the money to be used on a wider variety of new vehicles and parts. Under the loan rules, only vehicles that get 25% better fuel economy than their competitors can qualify for aid.
GM spokesman Greg Martin said in a statement that the loans “will support advanced technology development and implementation and will help speed the transition to cleaner, more fuel-efficient vehicles.”
Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=amAQinyujUSY&
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