Crisis Felt Unevenly on Main Street

In the meantime, said John Walda, president and chief executive of the National Association of College and University Business Officers, the colleges with money in the fund will have to "find some liquidity somewhere else. A letter of credit or some other short-term lending vehicle. But that is not easy these days, nor is it cheap."

"This is very problematic because a number of clients rely on this fund to make payroll and pay for other needs in their daily operating budgets," he said. "There is nothing wrong with the underlying value of the assets it the fund. But you just can't liquidate the fund because the market is frozen up."

Auto dealerships are facing rising interest rates because they heavily relied on Wachovia and other big Wall Street institutions to borrow money to refresh their inventories of vehicles.

Rates on these loans have been soaring and contributed to the collapse of Bill Heard Enterprises, which called itself the nation's largest Chevrolet dealership. Earlier this week, the dealership filed for bankruptcy citing sagging sales and the tumultuous credit markets. The Georgia-based company had dealerships across the South that sold an estimated 40,000 vehicles a year. The shutdown caused the layoffs of 3,200 employees.

Other car dealers are also shouldering higher interest rates. Their borrowing costs are set on the international financial market. Libor, or the London interbank offered rate, which is the rate that banks worldwide are charging each other for short-term loans, has spiraled with the financial crisis.

"My rates are floating rates for floor financing. As Libor goes up, those rates go up," said Jack Fitzgerald, owner of Fitzgerald Auto Malls, which operates a dozen locations, mostly in Maryland.

Fitzgerald said he is able to absorb the higher borrowing costs on his $50 million credit line. But he said that other dealerships are forced to rearrange credit as some lenders leave the marketplace.

"There is some question about availability," he said. "There are some institutions that are pulling back, from what I've heard from my friends."

Beyond their own borrowing costs, many car dealers say they are concerned about the ability of their customers, many of whom are shaken by steep losses in the values of their homes, to get credit to buy new cars.

"Most dealerships have long-term relationships with lenders, and they are probably going to have options, even if some sources of credit dry up," said Peter Kitzmiller, president of the 340-member Maryland Automobile Dealers Association. "Our biggest concern right now is how much credit is going to tighten for our customers as this shakes out."

Gerard Murphy, president of the Washington Area New Auto Dealers Association, which has 225 members in the greater Washington-area, agreed that at this point consumer credit was a bigger obstacle for car dealers than their own financing.

"We have gone from a situation where a lot of people could get financed -- perhaps some who should not have -- to a situation where it is much more difficult to get financing," he said.