Bailout Madness: Should Bad Auto Loans Be Bailed Out Too?

I was waiting for somebody to mention that the corporate bailout plan for the Wall Street elite seems to be a done deal. But a seemingly smaller request for aid was instantly shot down (by the President) months ago. If any of the financial houses begin to really fail, there will be investors that will step in to prop them back up (See Buffett-Goldman deal). Phil didn't discuss the issue like I thought he would though.

We should consider if any of the Big 3 were to file bankrupt and was then sold in parts to the highest bidder(s), many of their (outstretched) facilities would be shuttered leaving 10s of thousands jobless in an instant...not to mention the various supplier industries that support the larger corporations manufacturing efforts. Whole cities and town would be hurt within months of such an event.

I say this to indicate that auto companies are just as important to the US economy as the financial companies that basically bet big with American mortgages and lost even bigger on the gambling floor by ignoring clear indications that it was time to stop and walk away.

Bail out or no bail out, this economic downturn will not bode well for us. More and more car companies will stall development plans and offer “safe” marketable cars that will not take risks. The same thing happened during the early 80’s post 70’s downturn. The early 80’s was a terrible time for car design. In fact, the 80’s in general was a terrible time for car design.

Get ready to see a lot of “ecco” cars that will downsized with some sort of electric-internal combustion drive. Outside of the Tesla, what the other car companies are offering are laughable. The proposed Audi A1 electric and the BMW electric Issetta look like toys. The fact that BMW is considering brining back the inline 4 on the 3 series for the US market is great for polar bears but a step backwards for the automotive world. Don’t get me wrong, the ecco revolution we’re in is critical to the well being of the planet. Let’s hope we’re not stuck with a bunch of cars that have nothing but small wheels and bubble profiles.

This must be one of the most stupid postings at Autospies ever.

There should be absolutely no bailout of auto loans. People need to live with the decisions they made and reap the rewards or face any consequences as the case may be. If somebody couldn't afford a vehicle, they should have bought used or not bought.

There also should be no bailout of the 'big 3' US automakers. They have been mismanaged for much of my lifetime (I'm 40) and their poor labor negotiation skills and poor product planning skills have driven them to where they today rest. Similarily, if the 'big 3' ran a credit check on somebody and gave them a loan even if they were not creditworthy - they the automaker loan officer needs to deal with it. Its their problem.

Sorry to be harsh.

I agree. In a bad economy such as this its time for all of them to scale back re-focus their efforts and stop giving out bad car loans just to make monthly numbers look good. There's no way they can get by doing that crap in the state of disarray our country is in.

nybimmer- I am not suggesting we do so. But with all of the bailouts going on, it is a viable question. So we are just testing the waters here.

Corporate bailout is already costing us over $10k for every man woman and child alive today which means future generations will be burdened with more than 2 trillion, and that's not counting the 9trillion of debt that has accrued under Bush's reign and decades of tax cuts for the rich and private corporations. These bandaid solutions are not sustainable for future health of the US economy. The temporary lift in markets as a result of these cash injections are gonna be nothing compared to the continuing weakening of the dollar and overall instability of the economy.

Enough already, taxpayers should not be held responsible for the irresponsible investment decisions people have made.

this is total BS. i hate paying taxes for this exact reason; bailing out companies b/c of idiotic people who cant manage their credit. yes i agree its not the auto companies fault but going after the tax payers is not a peaceful solution either.

Is that the Lexus loading dock in the picture with all the new IS and ES models?

-00J

Actually it is a repo yard...

Cool, a repo yard. I've never seen one. If this is a photo you took of a repo yard, a more useful journalistic exercise would be for you to go down there and poke around, then write an article on the mix of vehicles repossessed.

Sadly, I suspect that many of them will be 7-10 yr old clunkers whose unsophisticated owners took on 'paper' to get basic transportation. That's the real scandal of this credit crunch - allowing finance sharks to loan people money, hit them with all kinds of fees, etc - and then yank the collateral.

I read an article recently where if a bank has a $2000 outstanding credit card balance that is going unpaid - they basically have a fee schedule to hit the person with $3000-$4000 in fees and interest in the first year alone. Its really scandalous.

Sadly NYBIMMER hit the nail on the head with some of the loan sharks out there. Some of these places run interest rates that are 200-300% APR that people not smart enough to know borrow without realizing they are digging themselves a hole they will never be able to get out from underneath.

Thanks for bringing this up.

-00J

HELL NO!

If they do it for one they should do it for all...

Not only no but HELL NO!