Archive for the 'Government loans' Category
March 11th, 2010 by Bill Cawthon
The Congressional Oversight Panel, created as a watchdog for the Treasury’s use of funds allocated in the Troubled Asset Relief Program (TARP), says GMAC still does not have a viable business plan after receiving $17.2 billion in government cash.
The panel is also critical of the Treasury Department’s handling of the GMAC case, saying the Treasury has been lax in requiring the finance company,which also handles consumer loan and floorplan financing for Chrysler Group dealers, to set out a clear course to becoming independently viable and repaying the taxpayers’ investment.
In a statement, the panel suggested breaking up GMAC and folding its automotive business back into former parent company General Motors. This would create a captive finance company similar to those used by other vehicle manufacturers.
To read the full report and see a video from Professor Elizabeth Warren, head of the panel, go to “The Unique Treatment of GMAC under TARP” on the Congressional Oversight Panel’s website.
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February 22nd, 2010 by DaveAdmin
Toyota, now being forced to follow the same rules as other automakers after breaking an NHTSA recall order, whined to the news media that the Obama administration was “not industry friendly.”
The company, which was recently found to have known about unintended acceleration and braking issues, and which bragged about pushing NHTSA to accept softer solutions in the past, complained about an “activist administration and Congress.”
Toyota’s internal documents talked about more aggressive management and said the new team had less understanding of engineering issues, then attempted to divert blame to the government’s support of General Motors and Chrysler. It also suggested that Toyota intended to continue on its growth and “be a leader.”
The unintended acceleration recall appears to have been avoided in the past by Toyota, which negotiated a limited floor mat recall in 2007 and has delayed the implementation of other regulations through its past lobbying might.
A Toyota spokesmen said the company’s first priority is its customers’ safety, and that it would be wrong to “conclude otherwise” based on an internal document.
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January 31st, 2010 by Bill Cawthon
According to the Detroit News, Neil Barofsky, the special inspector general overseeing the $700 billion bailout fund, has told Congress that the Treasury’s automotive supplier support program will be shut down in April.
The Obama Administration created the program to address the serious cash flow problems faced by suppliers due to declining orders, concerns about General Motors and Chrysler being unable to pay their bills and tight credit markets that prevented suppliers from financing their receivables. So far, the program has earmarked out about $2.5 billion in guarantees to GM vendors and about $1 billion to Chrysler Group suppliers.
In the same report, Barofsky confirmed that $3.7 billion remaining unpaid from loans to Chrysler LLC is unlikely to be repaid by Chrysler Group LLC. The report said, “As of December 31, 2009, no repayment of TARP funds had been received from old Chrysler, and none is anticipated.”
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January 28th, 2010 by Bill Cawthon
While Chrysler, GM and Ford got millions for low-emission vehicle development, Nissan North America just got a $1.4 billion loan from the U.S. Department of Energy to modify its Smyrna, Tennessee plant to produce its five-passenger LEAF electric vehicle and the batteries to power it.
Secretary of Energy Steven Chu announced the loan today. The money comes from the $25 billion Advanced Technology Vehicles Manufacturing Loan Program, authorized as part of the Energy Independence and Security Act enacted during the Bush Administration. It’s anticipated the loan will create 1,300 jobs when the revamped Smyrna plant is fully operational.
“Nissan applauds the Department of Energy’s support of the development of innovative, advanced vehicle technologies and the creation of clean energy jobs,” said Scott Becker, senior vice president, Administration and Finance, Nissan North America. “Nissan is committed to zero-emission mobility. This loan, which will bring production of the Nissan LEAF to Tennessee, is a significant step in sustaining American jobs and American manufacturing.”
When operating at capacity, the Smyrna plant will be able to build 150,000 LEAFs (LEAVES?) per year.
The LEAF will be rolled out in December of this year and go on sale in the 2012 model year.
Senator Corker must be so proud; he managed to chase off the only U.S. car company with a plant in his state paying good wages and got two import brands paying lower wages. Good job, Senator Bob!
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January 15th, 2010 by DaveAdmin
President Barack Obama announced his intent to charge the largest banks a fee to recoup bailout money. While the U.S. provided $65 billion to automakers under George W. Bush and Barack Obama, a good deal of which resulted in ownership stakes, it will not be charging automakers.
Some analysts critiqued the deal, claiming banks would be paying for the auto bailout and that banks would simply pass along the costs to customers, as they do with massive CEO bonuses. Other observers noted that many customers could move on to other banks, helping to decentralize the industry and reduce the risk that a single large, irresponsible bank could destabilize the economy.
While the government expects bankruptcy loans to be paid back, and expects a profit from its stakes in GM and Chrysler, the $20 billion approved under George W. Bush went to companies which remain in bankruptcy and are unlikely to pay most of it back.
GMAC may be liable for the fee, which will apply to companies with over $50 billion in assets and is intended to raise $90 billion over the course of ten years. Fannie Mae and Freddie Mac are exempt.
Most of the money spent in TARP went to the finance industry, whose representatives have been protesting the fees. The industry continued to pay its executives tens of millions of dollars in bonuses even after taking government aid, and some analysts believe that banks which paid their loans early did so to allow for higher executive pay and bonus packages, though it reduced their ability to lend money.
Bank of America had net profits of $6.5 billion for the first three quarters of 2009, and paid back its $45 billion government loan. In 2008, Bank of America paid $3.3 billion in bonuses, or $13,580 per employee, according to the Wall Street Journal; it expects to pay higher bonuses for 2009.
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January 6th, 2010 by DaveAdmin
GMAC Financial Services, which is now Chrysler’s preferred lender for customers and dealers, is getting ready to sell large portions of its once lucrative real estate business, which has cost the company billions of dollars in the last year. According to the Oakland Press, as quoted in the Detroit News, GMAC expects to lose $5 billion in the fourth quarter; analysts had previously suggested that much of this would be due to writeoffs coinciding with a government investment in GMAC. The U.S. Treasury will provide $3.8 billion in capital, some in the form of loans and some in the form of stock, which will make the Treasury GMAC’s majority shareholder. If the economy continues to slowly improve, the government may end up with a substantial profit on the deal.
GMAC is to focus on its automotive services; the loan company is vital to General Motors and Chrysler, with the availability of loans and leases often being the deciding factor in a sale.
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