This is from the Star.
The government uses all sorts of our money to inject liquidity into the banking system to get credit growing and the banks simply sit on the funds no doubt placing them in safe havens but still refusing to lend except for the least risky purposes. It never seems to dawn on anybody that the solution to this might be for the government to buy a bank outright and lend to the car market instead of wasting time and money hoping by moral suasion to get the banks to act responsibly. Of course doing anything like this would not be ideologically allowable even for so-called socialists these days. I can remember ages ago when even the Alberta govt. bought an airline because it thought Alberta was not getting sufficient air service. It built up the airline,got better air service for Alberta, made money and sold the airline at a profit.
Financing drying up, auto dealers say TheStar.com - Business - Financing drying up, auto dealers say
Association calls on Ottawa to push banks to make money available
November 22, 2008 Richard BrennanOttawa Bureau
OTTAWA–Canadian automobile dealers say the country's car market is threatened by banks refusing to lend them money to buy vehicles for their showrooms.
"We are seeing the financing that dealers receive dry up," Hugh Williams, director of public affairs for the Canadian Automobile Dealers Association, told a news conference yesterday.
The CADA is calling on the federal government, which has put up billions of dollars to ease the banks' credit crunch, to ensure that financing is made available to the 3,500 auto dealers.
Williams said it is hard to understand why banks have suddenly changed their tune on lending dealers money when the industry is on track to sell more than 1.6 million vehicles this year, which he says reflects the "pent up demand" in the Canadian marketplace.
That compares with a 16-year low for car sales in the United States, where consumers can't get financing because of the credit crunch south of the border.
Williams said the "phone has been ringing off the hook" for several weeks now with calls from dealers complaining that bank financing is drying up.
"There is an anomaly in the Canadian marketplace that we're tracking to have one of the second or third best years in history on a retail basis ... (and yet) dealers are getting into trouble with respect to not being able to get ... financing," he said.
Williams said the association can't get a straight answer out of the banks as to why the dealers are suddenly considered too risky to lend money to.
Calls come "every day from multiple dealers across the country ... expressing their problems with financing deals that were acceptable before this crisis took place that are now out the window," he said.
The Canadian Bankers Association said banks make lending decisions on a case-by-case basis based on risk.
"If the current global economic difficulties have had a negative impact on a business' financial situation, then the risk to the bank of lending to that business could increase," stated the CBA in an email.
The CBA released data this week showing the six largest banks continue to lend and have increased credit to businesses of all sizes by more than 11 per cent from October 2007 to October 2008.
CADA president and CEO Richard Gauthier said the public and policy makers must understand that the auto industry is the engine of the entire country's economy.
Automotive dealers employ more than 140,000 people across Canada and are represented in almost every community.
"Predictable and accessible credit is the oil in the auto industry's engine. Any effort by government to support the banking sector must be accompanied by a strong message to the banks that they must continue to support small, sound business," he said.