Letter Urging Congress to Support the Department of the Treasury's Use of EESA to Restore Liquidity to the Crucial Financing Sectors of the U.S. Automobile Industry
October 24, 2008
TO THE MEMBERS OF THE UNITED STATES CONGRESS:
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 Chamber has separately communicated with Secretary Paulson and Chairman Bernanke in strong support of utilizing EESA to support the automotive industry's financing needs in recognition of this industry's impact on American jobs and U.S. gross domestic product.
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 has already urged the Department of the Treasury to use its broad regulatory authority and all of the tools available to it, including the powers recently granted under EESA, to support the distressed auto industry which is so essential to the U.S. economy.
The Chamber encourage Congress to support the Department of the Treasury's use of EESA to restore liquidity to the crucial financing sectors of the U.S. automobile industry so that the industry can continue to operate and satisfy consumer demand.
R. Bruce Josten