GM Bailout

[lothar]

http://www.nytimes.com/2008/12/06/business/06chrysler.html?_r=1

Dan Quale had a hand in the funds never coming back to the taxpayers from Chrysler. Now the government did get some money back when they took over Chryslter capital. I have wondered what the total amount taxpayers were out after that. I could not find any hard numbers in my search.

Maybe Chrysler should pay a small amount on each car they sell after they are completely solvent to pay back the taxpayers with interest..

http://www.washingtonexaminer.com/economy/93962904.html
http://www.huffingtonpost.com/2010/05/17/chrysler-loan-leads-to-21_n_579404.html
http://www.businessweek.com/news/20...chrysler-holding-repaid-1-9-billion-loan.html

$1.9 billion + $1.6 billion = $3.5 billion lost to tax payers.

 

[manimal]

http://www.washingtonexaminer.com/economy/93962904.html
http://www.huffingtonpost.com/2010/05/17/chrysler-loan-leads-to-21_n_579404.html
http://www.businessweek.com/news/20...chrysler-holding-repaid-1-9-billion-loan.html

$1.9 billion + $1.6 billion = $3.5 billion lost to tax payers.

Thx Lothar,

 

[Red Dawn]

rofl, the lucerne.
had one as a rental. while it wasn't horrible 80's and 90's GM crap, it is nowhere near "damn nice".

go drive an audi or even a lexus if you want to experience nice.

Having driven neither a Lexus or Audi I can't compare them to the Lucerne, all I know is the GXL was a nice car from my experience, a lot better than I thought it would be.

 

[Jhhnn]

Meh. GWB initially bailed out GM, Obama merely followed through. So much for being a "Leftist". Same as with the Banks.

GM is doing much the same as Ford in standardizing their lines, if not as ruthlessly. It just makes sense. No more Oldsmobile, Pontiac or Saturn, and no more Mercury, either. No more incredibly confusing special order options that likely won't actually be delivered.

Buick remains, because it's a big seller in the world's largest market, China-

http://www.nytimes.com/2009/11/01/automobiles/01DESIGN.html

 

[Corn]

Having driven neither a Lexus or Audi I can't compare them to the Lucerne, all I know is the GXL was a nice car from my experience, a lot better than I thought it would be.

Comparable Lexus and Audi vehicles in the same size class cost double the price of the Lucerne. What failures they would be were they not nicer than a Buick. The Lucerne is a very nice car for the money it fetches.

This commentary brought to you by someone who drives a Lexus.

 

[Perknose]

Daimler could not fix them even in better times....

Daimler, a great company on their own, did a terrible, terrible job of marketing Chrysler while they owned them.

 

[SP33Demon]

http://www.washingtonexaminer.com/economy/93962904.html
http://www.huffingtonpost.com/2010/05/17/chrysler-loan-leads-to-21_n_579404.html
http://www.businessweek.com/news/20...chrysler-holding-repaid-1-9-billion-loan.html

$1.9 billion + $1.6 billion = $3.5 billion lost to tax payers.

That was chump change compared to the 2 TRILLION that GWB loaned to his banking buddies via the Fed... and the Fed still won't disclose who the 2 Trillion went to and whether they even paid it back despite the US Court of Appeals ruling ordering the Fed to disclose it.

http://www.bloomberg.com/news/2010-...ng-release-of-u-s-bank-bailout-documents.html

Fed will probably take it all the way to the Supreme Court, so much for the "Freedom of Information" Act.

2 Trillion. Try to wrap your head around that number in comparison to the stupid billion here/billion there that was loaned to car companies.

 

[Fenixgoon]

I am not bitching about chump change going to labor when bankers got 3 trillion and 12 trillion backstop. Hell they bonused out 1% of GDP to a few thousand people on tax payers dime. People, many of whom should be in prison according to William Black, not getting 120 million dollar bonuses ea CEO. If economy keeps evaporating bankers will own everything including those autoworkers houses.

Forrest for the trees.

What creates the shit around you, shit you use? Banks or labor.

this is my biggest problem with the whole bailout situation. congress wrote a blank check to wall street, but dragged the automakers through hell for what amounted to pocket change when compared to TARP et al.

i was against the idea of bailouts because i thought GM/chrysler should go through a standard bankruptcy and emerge leaner and meaner. i am glad to see that things are going well for both - GM has some excellent vehicles currently as well as new ones, and chrysler's new products sound good so far.

 

[Aegeon]

http://www.washingtonexaminer.com/economy/93962904.html
http://www.huffingtonpost.com/2010/05/17/chrysler-loan-leads-to-21_n_579404.html
http://www.businessweek.com/news/20...chrysler-holding-repaid-1-9-billion-loan.html

$1.9 billion + $1.6 billion = $3.5 billion lost to tax payers.

It should be noted that the actual loss to taxpayers versus doing nothing is definitely less than this.

In fact, Chrysler's pension obligation's to its workers are in the many billions of dollars, with a US government backed insurance plan on the hook if Chrysler went completely belly up. (Even merely delaying this for awhile does save the US government significant money versus having take it over immediately.)

In fact, if Chrysler stays as a viable profitable company in the long term, the US government has actually saved billions of dollars over the bailout costs by avoiding being stuck with those pension obligations, even completely disregarding the other economy and tax benefits of keeping the company operating. (I.E. employed workers pay taxes and profitable companies generally do as well.)

 

[PeshakJang]

Its SOP.

Oppose stimulus spending. Apply for stimulus funds.

Kinda like campaigning on closing tax-loopholes for big corporations and rich folk, while taking advantage of them yourself? Democratic SOP these days.

 

[her209]

Kinda like campaigning on closing tax-loopholes for big corporations and rich folk, while taking advantage of them yourself? Democratic SOP these days.

FAIL comparison is FAIL. But I agree, we should close tax loopholes for big corporations and rich folk.

And while we're at it, all the Congressmen that opposed TARP should return campaign contributions from Wall Street banks.

 

[lothar]

It should be noted that the actual loss to taxpayers versus doing nothing is definitely less than this.

In fact, Chrysler's pension obligation's to its workers are in the many billions of dollars, with a US government backed insurance plan on the hook if Chrysler went completely belly up. (Even merely delaying this for awhile does save the US government significant money versus having take it over immediately.)

In fact, if Chrysler stays as a viable profitable company in the long term, the US government has actually saved billions of dollars over the bailout costs by avoiding being stuck with those pension obligations, even completely disregarding the other economy and tax benefits of keeping the company operating. (I.E. employed workers pay taxes and profitable companies generally do as well.)

How about letting Cerberus Capital Management, L.P.(one of the richest private equity firms on Wall Street) pay for some(or *all*) of the bailout instead of tax payers?
Why didn't the government ensure that they will get the full amount of money(or most of it back) they loaned back from the company before allowing Chrysler to take the loan? They should have made the government loan the "top of the food chain" before the bond holders/UAW/secured senior debt holders and ensure tax payers get paid first before anyone else.

 

[Aegeon]

How about letting Cerberus Capital Management, L.P.(one of the richest private equity firms on Wall Street) pay for some(or *all*) of the bailout instead of tax payers?

At this point that's probably not realistic to mostly retroactively change things.

The big problem was if the government pressed too hard on this point, Cerberus Capital Management could have cut their losses, (the way they owned things they could avoid the pension obligation in this situation) and let the company be truly liquidated with the US government pension insurance fund completely stuck with the pension obligation which was substantially higher than the bailout amount in total.

 

[lothar]

Chrysler made an "operating profit" of $143 million in Q1 '10.
They posted a loss of $197 million after charges and taxes.

That compares with a $3.8 billion loss they posted from June '09(when they emerged from bankruptcy) to December '09.
Yes...They actually lost $4 billion in 6 months.

I haven't checked up on their Q2 '10 report which should have been out a month or two ago for an update of their business.
Still, the fact that they sold vehicles for more than it cost to make them shows me they're on a rebound.

You might even be able to buy their stock next year.
http://www.boston.com/business/articles/2010/09/17/chrysler_might_go_public_next_year/

Who owns Chrysler now?
UAW owns about 66%
US and Canadian governments own 12.4% jointly
Fiat owns 20% with an option to increase to 35%(I'm guessing they take the US/Canadian government's stake if they meet certain goals set by them?).

Wanted to repost my post.
As already mentioned, Chrysler is on the path to profitability.

I'm also glad to see that Robert Nardelli has left the company.

 

[lothar]

At this point that's probably not realistic to mostly retroactively change things.

The big problem was if the government pressed too hard on this point, Cerberus Capital Management could have cut their losses, (the way they owned things they could avoid the pension obligation in this situation) and let the company be truly liquidated with the US government pension insurance fund completely stuck with the pension obligation which was substantially higher than the bailout amount in total.

Why didn't the government ensure that they will get the full amount of money(or most of it back) they loaned back from the company before allowing Chrysler to take the loan? They should have made the government loan the "top of the food chain" before the bond holders/UAW/secured senior debt holders and ensure tax payers get paid first before anyone else.

 

[Engineer]

I'm also glad to see that Robert Nardelli has left the company.

Talk about the "good ole boys network". Can't believe that guy ran Home Depot into the ground (at the time), left them with $200 million golden parachute and then was picked up within a year (or 2) by Chrysler. What a dumbass move by that company.

 

[ElFenix]

Daimler could not fix them even in better times....

daimler looted chrysler and intentionally ran it into the ground in order to fix mercedes. they took the most profitable car company on the planet with new models and a good product pipeline and ten years later left it broken and barren. good job, krauts.

 

[Aegeon]

Why didn't the government ensure that they will get the full amount of money(or most of it back) they loaned back from the company before allowing Chrysler to take the loan? They should have made the government loan the "top of the food chain" before the bond holders/UAW/secured senior debt holders and ensure tax payers get paid first before anyone else.

We can debate that, although it probably should be noted this decision was made under the Bush administration.

I believe allot of the UAW holdings are directly related to supporting the pension and the like, so switching the order really doesn't change things. If the government doesn't end up backing the pension insurance fund, that would actually undermine confidence in the government in allot of ways and among other things have serious economic consequences just for that reason. Furthermore, you would suddenly have a bunch of pension holders suddenly without any pension at all after all the work they put in over the years, and that certainly isn't going to do the general economy any favors. (People literally struggling to stay off the street won't exactly be spending that much as far as the general economy is concerned.)

 

[ElFenix]

iirc, a lot of the senior debt holders got screwed in the bailouts in favor of the .gov and UAW.

 

[sandorski]

iirc, a lot of the senior debt holders got screwed in the bailouts in favor of the .gov and UAW.

I suspect plummeting Stock Values and Bankruptcy Protection screwed over people worse.

 

[lothar]

We can debate that, although it probably should be noted this decision was made under the Bush administration.

I believe allot of the UAW holdings are directly related to supporting the pension and the like, so switching the order really doesn't change things. If the government doesn't end up backing the pension insurance fund, that would actually undermine confidence in the government in allot of ways and among other things have serious economic consequences just for that reason. Furthermore, you would suddenly have a bunch of pension holders suddenly without any pension at all after all the work they put in over the years, and that certainly isn't going to do the general economy any favors. (People literally struggling to stay off the street won't exactly be spending that much as far as the general economy is concerned.)

My basic point is if the US government can prevent it's own citizens from discharging federal student loans in bankruptcy proceedings, why can't they require or do the same to any taxpayer money loaned out to corporations?

From what I understand the Bush Admin loaned Chrysler $4 billion in early Jan '09. That's where the $1.6 billion loss was from.

There is also a $1.9 billion loss from another loan(Obama's Admin is responsible for this one) made to the company that went through bankruptcy proceedings. The Treasury department has already indicated slim hopes of recouping much if anything at all from that separate $1.9 billion loan.

 

[manimal]

My basic point is if the US government can prevent it's own citizens from discharging federal student loans in bankruptcy proceedings, why can't they require or do the same to any taxpayer money loaned out to corporations?

From what I understand the Bush Admin loaned Chrysler $4 billion in early Jan '09. That's where the $1.6 billion loss was from.

There is also a $1.9 billion loss from another loan(Obama's Admin is responsible for this one) made to the company that went through bankruptcy proceedings. The Treasury department has already indicated slim hopes of recouping much if anything at all from that separate $1.9 billion loan.

Its another example of corporations having more rights under the law then individuals.. Citizen's United ruling is the wind catching those sails..

 

[zephyrprime]

daimler looted chrysler and intentionally ran it into the ground in order to fix mercedes. they took the most profitable car company on the planet with new models and a good product pipeline and ten years later left it broken and barren. good job, krauts.

It's interesting that international auto mergers almost never work. In general, a lot of big mergers fail economically and are actually done due to CEO greed and ego (the execs at the bought out firm gets a big payout).

 

[ElFenix]

I suspect plummeting Stock Values and Bankruptcy Protection screwed over people worse.

previous shareholders would have been screwed either way, but usually it's the senior lienholders that end up owning the restructured company. that's not what happened here. i need to find a good law review article about it.

It's interesting that international auto mergers almost never work. In general, a lot of big mergers fail economically and are actually done due to CEO greed and ego (the execs at the bought out firm gets a big payout).

the analysis on hostile takeovers shows that the bought out shareholders get nearly all the benefit to the merger. which is why the bought out shareholders are always in favor of the hostile takeover ("you're willing to buy these shares that are $50 right now for $75? OK!"). they're only called "hostile" because management at the bought firm gets canned (they want to keep their fake jobs).