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Ford, Lawmakers Discuss Loan Program

Following a closed-door meeting with lawmakers, Ford said the industry's push for low-interest loans has not been undermined by the turmoil enveloping Wall Street.

WASHINGTON (AP) -- Ford Motor Co. Executive Chairman Bill Ford said Tuesday that the auto industry's push for low-interest loans has not been undermined by the turmoil enveloping financial institutions on Wall Street.

Ford noted that the $25 billion loan program had been approved in last year's energy bill and many lawmakers understood the difference between funding the low-interest loans and growing calls for a rescue of failing financial institutions.

"This is something that was already passed but unfunded. So there is great familiarity among the membership long before we got into the last two days on Wall Street," Ford said following a closed-door meeting with Michigan and Ohio lawmakers.

"I don't think there has been any confusion at all," he said.

Auto industry officials have been building support for the loan program on Capitol Hill to help the industry develop more fuel-efficient vehicles. Their pitches have coincided with unsettling times on Wall Street, including the collapse of Lehman Brothers and forced sale of Merrill Lynch to Bank of America.

Congress authorized $25 billion in loans in last year's energy bill but has not funded the program. The loans were intended to help the industry meet new fuel economy standards of at least 35 miles per gallon by 2020, a 40 percent increase.

Ford said the lawmakers "understand the importance of making sure we move forward on technology and on fuel economy and in our case converting some of our plants from trucks to smaller cars."

Funding for the low-interest loans are a top priority for Ford, General Motors Corp., and Chrysler LLC because the industry faces a challenging economy, a tight credit market and a shift from profitable trucks and SUVs because of high gasoline prices. The government interest rate for the loans would be around 5 percent, well below the double-digit rates the struggling companies would face on the open market.

GM Chairman and CEO Rick Wagoner also was in Washington to meet with lawmakers and said following a speech to the Washington Economic Club on Tuesday night that he was "optimistic that we have a good opportunity to get this done this year." Wagoner said in Detroit earlier Tuesday that the turmoil on Wall Street should not affect the loan program because it was part of last year's energy bill.

House Speaker Nancy Pelosi, D-Calif., said congressional leaders were considering including the loans in a bill that would keep the government running past the start of the Oct. 1 budget year, a plan that would be approved before Congress adjourns later this month.

"We might have something for Michigan. We're working on the details," she said.

The Congressional Budget Office has estimated that the $25 billion in loans would cost the government $7.5 billion in case one of the companies defaults on the loan. But supporters of the plan said the auto industry would repay the loans in full, plus interest.

"We believe this is going to be zero-cost to the taxpayers, quite frankly," said Rep. Candice Miller, R-Mich. She said supporters were "cautiously optimistic that this is all going to come together. But it's not a walk in the park. There are a lot of questions."

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