Posted by Jed Lewison on Tue Nov 18, 2008 at 7:49 AM Pacific

The Auto Industry Bailout Plan = Low Interest Loans

The NYT outlines the two options that seem to be on the table:

Mr. Reid proposed a $100 billion economic stimulus plan that would include $25 billion in loans for the auto industry as well as $13.5 billion for roads, mass transit and other public infrastructure; money for financially ailing state governments; more jobless benefits; and added food stamp assistance.

If that plan stalls, as seems virtually certain since the White House and Congressional Republicans have resisted it in the past, Democrats say they will propose a separate program that would divert to the auto industry $25 billion of the $700 billion approved earlier for the financial industry. Companies would have to meet a set of conditions like limits on executive compensation and a ban on dividend payments. Under the Democratic legislation released Monday evening, the loans would be for 10 years at 5 percent interest the first five years and 9 percent the second five.

It seems that advocates of the bailout have not focused enough on the fact that the  bailout consists of cheap loans rather than outright grants.

The Auto Industry Bailout Plan = Low Interest Loans

The NYT outlines the two options that seem to be on the table:

Mr. Reid proposed a $100 billion economic stimulus plan that would include $25 billion in loans for the auto industry as well as $13.5 billion for roads, mass transit and other public infrastructure; money for financially ailing state governments; more jobless benefits; and added food stamp assistance.

If that plan stalls, as seems virtually certain since the White House and Congressional Republicans have resisted it in the past, Democrats say they will propose a separate program that would divert to the auto industry $25 billion of the $700 billion approved earlier for the financial industry. Companies would have to meet a set of conditions like limits on executive compensation and a ban on dividend payments. Under the Democratic legislation released Monday evening, the loans would be for 10 years at 5 percent interest the first five years and 9 percent the second five.

It seems that advocates of the bailout have not focused enough on the fact that the  bailout consists of cheap loans rather than outright grants.

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