“Ford is the healthiest company in the intensive-care unit right now, and you don’t want to push them over the edge,” said Representative Mike Rogers, a Michigan Republican. “I don’t want the third company to go into bankruptcy because the government put them there by making them artificially uncompetitive.”

The Banking Committee hearing will include “whether government assistance to certain companies is unfairly disadvantaging other domestic competitors and their customers,” Sessions said in a statement to Bloomberg.

Ron Bloom, a senior adviser to the auto task force, is scheduled to testify, along with Ed Montgomery, the White House Director of Recovery for Auto Communities and Workers.

Ford Uses TALF

Rogers said the U.S. Treasury could help Ford by expanding an effort to thaw consumer credit to include financing for car dealers’ inventory. On March 18, Ford and Nissan Motor Co. became the first automakers to sell debt backed by auto loans eligible for the federal program known as the Term Asset-Backed Securities Loan Facility, or TALF.

Ford, which lost a record $14.7 billion last year, avoided emergency U.S. aid because it borrowed $23 billion in 2006 before credit markets froze. On June 1, the day GM filed for Chapter 11, Ford issued a statement saying it “remains absolutely committed to continuing to make progress on our transformational plan without accessing emergency taxpayer assistance.”

Congressional Republicans have sounded alarms over the savings GMAC is gaining through its government support, which includes $13.5 billion in U.S. funds and the federal guarantee of some of its debt. That gives it lower borrow costs than Ford can get through TALF. GMAC took over the lending operations of Chrysler, as part of the Auburn Hills, Michigan-based automaker’s bankruptcy reorganization.

Two Examples

“It puts Ford, which is attempting to do everything right, at a huge competitive disadvantage to GM, which is run by the government,” said Representative Jeb Hensarling, a Texas Republican. “It’s very difficult to compete with somebody who can print money and, legally, only Uncle Sam can do that.”

Ford’s higher cost of capital is highlighted in two recent transactions.

GMAC, 9.9 percent owned by GM and lender to its dealers and buyers, sold $3.5 billion of 2.2 percent three-and-a-half year notes on June 3 guaranteed by the Federal Deposit Insurance Corp. priced at 99.841 cents on the dollar to yield 2.25 percent. Ford issued $1.1 billion of five-year 8 percent notes May 28, priced at 82.036 cents on the dollar to yield 13 percent. Paying a higher yield boosts Ford’s borrowing costs.

Guaranteed LoansGMAC’s bonds have rallied since receiving a federal bailout Dec. 29. Its $556 million of 6.75 percent notes due in 2014 traded June 3 at 85.5 cents on the dollar to yield 10.3 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. In December, the debt traded as low as 35 cents, yielding 32 percent.

FDIC-guaranteed loans from GMAC are limited to $7.4 billion, which won’t cover all its capital needs. GMAC had $82.2 billion in automotive lending facilities at the end of 2008, according to its annual financial statement. GMAC also had $10.9 billion of auto assets in its online bank, now known as Ally Bank.

Beyond the FDIC-guaranteed loans, the home and auto lender is raising capital through its new online bank, Ally Bank. GMAC became a bank holding company last year, which broadened its sources of money and made it eligible for a federal bank bailout. Cerberus Capital Management LP has reduced its stake to 22 percent, while the U.S. Treasury now holds 35 percent.

GMAC Won’t ‘Apologize’

Brenda Hines, a spokeswoman for lending arm Ford Motor Credit, said the automaker is speaking with the government about the credit markets.

“We don’t really know yet what the effects will be of the government’s actions and whether GMAC will have a total cost advantage to us,” said Hines.

Ford rose 2 cents to $6.38 at 4 p.m. in New York Stock Exchange composite trading. The shares have more than doubled this year.

“Our goal is to remain competitive and to make credit available to consumers and businesses, including auto dealers,” Proia said. “We’re not going to apologize for wanting to be competitive.”

Ford Credit’s worldwide borrowing cost is 5 percent, Hines said. GMAC’s global borrowing cost was 6.21 percent in the first quarter, said Proia. Ford’s advantage in borrowing costs will evaporate in the near term as GMAC accesses federally backed, low-cost loans, said Kathleen Shanley, a Chicago-based bond analyst for Gimme Credit LLC of New York.

‘Huge Windfall’

Cheap access to capital has given GMAC “a huge windfall from the federal government,” said Shanley. Ford, though, also benefits from not taking government aid.

“Regulators have made a political decision to support GMAC as part of the broader bailout for GM,” Shanley said in an e- mail. “I doubt that Ford shareholders would care to change places with GM shareholders. The fact that Ford has been able to raise money in the unsecured debt markets is a sign of strength, not weakness (even given the higher cost.)”

Ford dealer Beau Boeckmann, who depends on the automaker’s finance arm to fund his inventory and his car loans, said it is unfair to give GM any advantage on the showroom floor.

“Why should they be rewarded for failure?” said Boeckmann, vice president of Galpin Motors in Los Angeles, the world’s biggest-selling Ford dealer. “To create a competitive disadvantage for the company that tried to do everything right is just not fair and it’s not the American way.”

Ford Credit Plans

GMAC’s government support has drawn accusations of unfairness from the American Bankers Association, a Washington- based trade group. In a May 27 letter to FDIC Chairwoman Sheila Bair, ABA President Edward Yingling said GMAC’s Ally Bank is attempting to lure customers with interest rates on certificates of deposit “well above the market.”

“This aggressive deposit strategy is particularly egregious when it is used by a troubled bank in which the government holds a controlling interest,” Yingling wrote.

GMAC Chief Executive Officer Al de Molina responded with a letter to Yingling June 1 accusing him of making “highly inappropriate” accusations. GMAC is using its federal aid to “directly support American small businesses and consumers in these difficult times, as other banks should be doing,” de Molina wrote.

Ford has no plans to convert Ford Credit into a bank holding company, which would require the automaker to divest control of its wholly owned finance arm, Hines said.

The company applied to the government to create an industrial bank subsidiary of Ford Credit, which would give it new sources of funding through access to FDIC-insured deposits. That application, filed in February 2008, hasn’t been acted upon by the FDIC, Hines said.

Should Ford Credit receive the industrial bank designation, the automaker wouldn’t have to cede control of its finance arm, which in good years can account for more than half the company’s profits.

“There is a cost of capital issue for Ford Credit in the near term,” said James Ricci, a director in the automotive practice of consultant Grant Thornton in Southfield, Michigan. “But that is more than made up for in the long term by the fact that Ford gets to keep all the money Ford Credit makes.”