A financial trade association says yes. What do you say?
The idea came to light, yesterday (9-24-08), when reports of behind-the-scenes maneuvering to expand a $700 billion federal cleanup of bad debt.
Personally I say why not? Heck lets throw in credit cards, student loans and home equity lines as well. …I wonder if I can sneak my mortgage in.
Well the American Financial Services Association was asking Congress to allow auto finance companies and other institutions to tap the $700 billion bailout fund designed for the troubled mortgage industry. The trade association was also proposing that automobile loans be classified as "troubled assets" along with home mortgages.
Wow, so what does that mean to us here at Terry Labonte Chevrolet if auto loans are also performing badly? Hmmm, well that'll take a little more facts than my brain can handle right now, but basically on everything I’ve read, it’s not that auto loans on a whole are performing badly, but what’s happening in the mortgage industry is affecting liquidity, and primarily the secondary markets (where auto loans are bundled or batched together and sold as securities). So if auto finance companies are not able to raise the money they to need to finance more auto purchases, then that very well could mean tighter lending qualifications for auto buyers …and if the typical good person that may have the financial ability to pay for a car purchase but due to troubled times in the past their credit became damage, they may have a tougher time in getting an auto loan. ...As the continual “ripple effect” flows, that can certainly affect not only you, me and the neighbors down the street but Terry Labonte Chevrolet and other dealerships well - WHY? Because as you know we are in business to sell cars.
I’ll leave you to ponder the thoughts as I have, but I won’t sign off until I give you a quote from…
Bill Himpler, executive vice president of federal affairs for the American Financial Services Association, said, "The ripple effect of the credit crunch in the mortgage sector has brought the nation's finance companies' ability to secure credit lines from investors to a virtual standstill."
~ until next time, Piece-out
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