Bad Auto Loans: Should They Be Bailed Out Too?

Auto Loans
Auto Loans

Chrysler CEO Bob Nardelli says tighter consumer credit is making it tougher to sell a car. Now the industry as a whole wants the federal government to take bad auto loans off the hands of auto finance companies.

Hmmmmmm, in a matter of days it seems like everyone is targeting the credit crunch as the issue hurting the industry.

While I agree with Mr. Nardelli's assessment of tighter credit hurting sales, I am not a fan of the federal government taking bad auto loans off the hands of the finance companies.

Some of you will read that and say, "Wait, Phil's in favor of Federal loans for the industry so why is he against helping out the finance companies?"

Yes, I realize off-loading billions in bad debt would help the finance firms and perhaps make them a little more willing to extend credit and spur sales. How much that would help, I'm not sure. But the federal government loaning $25 billion to the auto industry to re-tool and develop new technologies is far different from the government taking over bad loan debt.

To me, this smells like the finance firms trying to get government help at a time when Washington seems to have the checkbook open. Funny, we rarely heard about the need for someone to rescue the finance firms before bail out talk started sweeping through Washington.

I feel for the finance companies. But, in my opinion, getting federal aid on this issue is not the answer.

Click on Ticker to Track Corporate News:

- Ford Motor

- General Motors

- Nissan

- Honda Motor


Questions? Comments?