House Authorizes $25 Billion in Loans to Auto Industry

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The House of Representatives on Thursday passed a loan package totaling $25 billion to aid the struggling auto industry. The legislation, which passed by a vote of 370-58, now moves to the Senate.

Although the package is unrelated to the $700 billion bailout for the financial sector being considered in Congress, the credit freeze has shut the auto industry from private lending. The legislation only authorizes loans, which must be repaid. So it's not a bailout.

Automaker General Motors (GM Quote), Ford (F Quote) and Chrysler have pushed hard for the legislation's approval. Both Michigan and Ohio would benefit the most from the legislation -- two key battleground states in the fall presidential election -- and presidential candidates Sen. Barack Obama (D., Ill.) and Sen. John McCain (R. Ariz.) have endorsed the legislation.

Even if the legislation passes the Senate and President Bush signs it, it would not necessarily offer immediate help. The Financial Times reported that the Department of Energy would need time to write regulations for the loans, which might not be ready until 2009 at the earliest.