Chamber Head Says Will Fight For Increase In Auto Loan Ceiling

[cashlenders]

ST. PAUL, Minn. -(Dow Jones)- The head of the U.S. Chamber of Commerce said the powerful business lobby would support U.S. automakers' call for up to $50 billion in low-interest loan guarantees from the federal government, and said it should be done without raising taxes elsewhere on the corporate sector.

In an interview with reporters from Dow Jones Newswires here Tuesday, Tom Donohue, the chief executive and the president of the U.S. Chamber, urged lawmakers to approve the loan request.

"We're going to support the loans the auto companies are looking for without a pay-for," said Donohue. "We need to do that without a pay-for which says I'm going to give the auto makers money but I'm going to make the aluminum companies or the oil companies pay for it."

Referring to the bailout of Chrysler when it was headed by Lee Iacocca in 1979, Donohue said the money was in fact paid back by Chrysler ahead of schedule.

Senior executives of the three major U.S. automakers said last month that they planned on asking Congress to increase the ceiling on the loan program before it was even implemented, citing the continuing difficulties in the market.

As part of last year's wide ranging energy law, a provision was created to lend U.S. vehicle manufacturers up to $25 billion.

The measure was added to the legislation at the last minute and it was unclear to many observers whether the cash was intended as a bail-out to the troubled industry, or as a means to motivate the companies to invest in the next generation of clean cars.

But Congress has yet to appropriate funds for the program, and the Treasury Department has not implemented the final regulations for the program.

Last week at the Democratic political convention in Denver, Michigan Sen. Debbie Stabenow, D-Mich., said she would support increasing the ceiling to $50 billion. The senator, who is a strong advocate for the auto industry, said she hoped a deal could be put together when lawmakers return to Washington D.C. next week.

Both presidential candidates have issued statements saying they would support lending money to the companies, but neither has specified how much.