Letter to Secretary Paulson and Chairman Bernanke Urging Them to Apply the Powers of the Emergency Economic Stabilization Act to Support the Automotive Industry
The Honorable Henry M. Paulson, Jr.
Secretary of the Treasury
U.S. Department of Treasury
1500 Pennsylvania Ave., NW
Washington, DC 20220
The Honorable Ben S. Bernanke
Federal Reserve System
20th St. and Constitution Ave., NW
Washington, DC 20551
Dear Secretary Paulson and Chairman Bernanke:
As your agencies look for ways to restore stability and confidence to the U.S. financial system, and to lead the nation's economic recovery, the U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region strongly supports applying the powers of the Emergency Economic Stabilization Act (EESA) to support the automotive industry. The automotive industry is one of the most critical sectors of the U.S. economy with almost 4% of the U.S. gross domestic product and it is responsible for the one in 10 American jobs that are related to automotive manufacturing.
Directly and indirectly, the economic breadth and contribution of the U.S. automotive industry is deep and far reaching across the country. U.S. automakers directly employ approximately 355,000 American workers and indirectly employ nearly 5 million additional jobs through related industries that are dependent on auto manufacturing, sales, and related activities. Over the last two decades, the automotive industry has invested nearly a quarter of a trillion dollars in the U.S. and is among this country's top industries for R&D spending. Automakers also are among the largest purchasers of U.S.-manufactured steel, aluminum, iron, copper, plastics, rubber, electronics, and computer chips.
The financial crisis is having a dramatic, negative effect on automobile manufacturers, suppliers, and especially dealers and automobile finance companies that provide financing to dealers, consumers, and commercial purchasers of vehicles. Approximately 94% of new vehicle purchases by U.S. consumers have been with financing but because of the credit crunch, financing is not available for consumers seeking to buy or lease cars, or to dealers to facilitate their inventory purchases. This year alone, the number of average-income buyers approved for car loans have been cut in half. As a result, the market is experiencing a precipitous sales decline of millions of lost sales which has not been seen since the early 1980s recessionary period. These sales declines put at risk not only auto manufacturers, but their network of suppliers, vendors, and other businesses that provide goods and services to them.
The current economic environment requires immediate government action to restore liquidity so that the U.S. auto industry is able to function, meet consumer demand, and develop new energy saving technologies. The Chamber urges you to use your broad regulatory authority and all of the tools available to you, including the powers recently granted to you by EESA, to support the distressed auto industry which is so essential to the U.S. economy.
R. Bruce Josten