Finance Companies want to sell bad auto loans to Government

[dollardaze]

Finance companies are gearing up to ask the U.S. Treasury Department to sell bad auto loans to the government as a part of the bailout plan which is intended to boost the flagging economy by restimulating credit markets.

"The onus is now on us to make the case for our companies to be able to sell non-mortgage related assets to the government," Bill Himpler, executive vice president of the American Financial Services Association, said on Tuesday.

The group represents a range of finance companies, including major auto affiliates like Ford Motor Credit Co, and GMAC LLC, General Motors Corp. has a 49 percent stake in GMAC.

The $700 billion rescue plan approved by Congress last month and now in the process of being implemented by the Bush administration allows the Treasury to buy up bad auto loans, if it believes that doing so is critical to the health of the U.S. economy.

"We're in the process of putting together our case ... that auto paper is key to financial market stability," Himpler said.

He said the association would try to "cast as wide a net as possible" to make sure that companies holding loans that consumers have failed to pay back would be eligible to improve their books and extend credit to new borrowers.

Auto loans traditionally perform well but defaults are starting to pick up because of overall credit market upheaval, the financial services group said.

[pennypinch]

Everybody wants a piece of that $700 billion dollar pie. I don't blame them though. The decision has been made, the money is there. The finance companies are in hot water and will turn to the government to bail them out.