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Rep. Manzullo to Big Three: Why Are You Now Banks?

Rep. Donald Manzullo (R-Ill.) just took the heads of the Big Three to the woodshed over the fact that each has financing arms that could convert themselves into bank holding companies and be eligible for government bailout money aimed at financial institutions.

"Now, Mr. Wagoner, you want to go into the commercial banking business? You would be a bank?" a highly peeved Manzullo directed at GM chief executive Rick Wagoner. "You're there to make cars, not to run banking operations." In late November, GMAC filed for bank-holding company status.

Manzullo disputed the claims of the Big Three that potential car buyers cannot get auto loans under the current credit crunch, saying that "community banks are loaded with money."

He then accused the Big Three's financing arms of pushing community banks out of the lending business by offering lower rates than the community banks would offer.

"You have created your own sub-prime market in automobile loans," Manzullo continued. "You have been giving too-easy credit to people who couldn't afford automobiles."

Unfortunately, Manzullo let the heads of the Big Three off the hook by saying: "I don't expect an answer because there isn't one."

We would have liked to have heard an answer, or at least an attempt at one.

-- Frank Ahrens
The Ticker is Twittering!

By Frank Ahrens  |  December 5, 2008; 11:42 AM ET
Categories:  The Ticker  | Tags: Chrysler, Ford, GM, General Motors  
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Manzullo "gets it"; auto makers have been sub-prime lenders for both auto and mortgage loans for years. This is how they have been able to stay in business with their sub-par quality auto offerings. I will be amazed if this is a REVELATION for anyone!

Posted by: kondrek | December 5, 2008 3:06 PM | Report abuse

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