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The Bailout Parade Continues

Posted By Dave Mason On March 26, 2009 @ 12:16 pm In Economics | Comments Disabled

First Washington decided auto makers needed bailing out, next it was auto parts suppliers, not to mention “too big” insurance companies. Now one Congressman is proposing federal bailouts for individual auto dealers.

At today’s House Financial Services Committee hearing one Congressman floated a new proposal: Federal Floor Plan Financing.

Auto dealers generally pay for new cars when they arrive at the dealership. Until recently, auto manufacturers offered their own “floor plan financing” loans for this purpose. Some automakers now find themselves unable to offer these loans to dealers. There are other sources for such financing, though it may be more expensive or harder to get that the manufacturer loans. And a weak dealer might have trouble qualifying. Thus, the proposal for one more federal bailout.

The Congressman’s rationale was logical in a way: in for a dime, in for a dollar. As long as Washington is bailing out the auto industry, why not do the whole job? Is there really that big a difference between loans to Chrysler and loans to Chrysler dealers?

What this illustrates clearly is that the original sin is allowing the bailouts in the first place. Once you start where do you draw the line?

For our, money, the “line” should be somewhere far short of “Federal Floor Plan Financing”. But really, wouldn’t be better not to start at all?


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