Hard & Straight Talk About The Auto Bailouts – Did Obama Just Start The Bankruptcy Reorganization

General Motors and Chrysler are Bankrupt. Plain and simple.

“Bankrupt: any insolvent debtor; a person unable to satisfy any just claims made upon him or her.”

General Motors and Chrysler fit the defintion perfectly.

Absent the unbelieveable Political Theater of the day both Chrysler and GM would have been directed into Chapter 11 reorganization 6 months ago and both companies would be on their way to a rebirth by now. The worst would be over, better days ahead. What has the billions of dollars in taxpayer money bought us – a dealy in the inevitable.  

GM and Chrysler are, despite any claims to the contrary, on their way to the bankruptcy court house now.

Whether it is by the politically created names of “surgical bankruptcy” http://www.detnews.com/apps/pbcs.dll/article?AID=/20090330/AUTO01/903300393/1148/rss25  or “prepackaged bankruptcy” http://www.bloomberg.com/apps/news?pid=20601087&sid=aRfqFMhlj5lk&refer=worldwide it is bankruptcy non the less. GM and Chrysler cannot pay their own operating expenses nor can they pay their parts suppliers. They are bankrupt and have been bankrupt since some time early last year. http://money.cnn.com/2009/03/19/news/companies/auto_parts_bailout/index.htm?postversion=2009031919

GM and Chrysler are continuing to receive  bailout money to this day. GM will continue to receive “operating capital” for the next 60 days while Chrysler will receive it for thre next 30 days. For some reason the Obama Admministration refuses to dislcose the exact amount of money involved. Last November GM was burning through $24 Million US dollars a day in cash – The Main Stream Media has incorrectly reported that Washington said no more cash – What Washington actually said was this, “GM, you’ve got 60 days worth of additional cash- Chrysler you have 30 days cash. Why hasn’t anyone asked why Chrysler only received 30 days cash?

The terms “prepackaged” and “surgical” do not appear in the bankruptcy code – the terms are the creation of Politicians who simply do not want to admit that they were wrong, that Bankruptcy was the correct thing to do all along. Bankruptcy does not mean that GM or Chrysler will disappear. They will not. Contracts and business models will be “restructured” and the Companies will attempt to return to viability (profitability) once again.

Bankruptcy is not going to cause a negative impact on the economy. Bankrutcy does not create conditions which do not already exist. Bankruptcy is the end result – not the cause.

GM’s latest round of employee reductions from 62,400 hourly employees in North America to 54, 900 employees http://news.yahoo.com/s/ap/20090326/ap_on_bi_ge/gm_buyouts   will continue, not because of a Bankruptcy but because of the financial condition of GM demands that GM have a smaller work force. GM was and is “not a viable” business concern because it is operating under a “business plan” that prevents it from making a profit. In the 4th Quarter of 2007 GM lost 39 Billion Dollars. The 4th Quarter of 2007, long before the economic down turn hit home. http://www.usatoday.com/money/autos/2009-03-05-gm-auditors-statement_N.htm GM’s current downsizing began in 2005. http://money.cnn.com/2005/11/21/news/fortune500/gm_cuts/.fortune/index.htm?postversion=2009031112  http://articles.latimes.com/2007/jan/06/business/fi-gm6   http://money.cnn.com/2008/11/11/news/companies/GM/index.htm    

2005 was 4 years ago – and the problems didn’t start then.         

GM’s current problems are not the focus of this post. (See Post From Nov 2008 https://mcauleysworld.wordpress.com/2008/11/11/why-we-shouldnt-bailout-the-detroit-3-370000-per-employee-bailout/)

What happens next is.

1st: Gettlefinger has to go.

The UAW has not been truthful to its members. Listen to them when they appear on TV. Unfair trade from abroad (don’t look now – half the US auto industry is copmposed of “transplants” Honda, Toyota, Hundai, etc – built in America, by American Workers – and those workers actually earn more than their UAW counter parts http://www.aftermarketnews.com/Item/28594/uaw_losing_pay_edge_foreign_automakers_%20bonuses_boost_wages_in_us_plants_as_detroit_car_companies_struggle.aspx) – https://mcauleysworld.wordpress.com/2008/11/17/stop-the-auto-industry-bailout-pay-offs-to-the-detroit-3-at-expense-of-taxpayers/   The transplants now directly employ 150,000 US workers – GM employes 54,000 with additional subtractions to come. http://www.msnbc.msn.com/id/24947044 )

The next most frequently heard excuses – it was NAFTA or the economy went bad. GM & Chrysler went bad long before the economy slowed – one year ago the UAW refused to acknowledge the worsening economy and went on strike – closing 29 GM plants –  http://blog.mlive.com/autoblog/2008/03/american_axle_strike_hobbling.html , http://seekingalpha.com/article/67124-american-axle-strike-unions-continue-to-kill-u-s-manufacturing . In 2007 the UAW shut down GM with a strike. http://money.cnn.com/2007/09/25/news/companies/gm_uaw/index.htm  The UAW leadership has created a delusional membership.

The fact that GM ruled the auto industry 50 years ago is completely immaterial to today’s market place. GM and the GM worker of today bare no resemblance to their Grandfathers of the 40’s – The GM and the GM worker that helped win WWII are only a foot note in history – one of the most distingiunshed footnotes of this Country’s history – but the modern GM and its workers should be embarassed to make this self serving comparison. Can you imagine any GM employee in that post World War II era claiming they couldn’t compete with anyone for any reason …..   

2nd – GM needs to continuing downsizing. Depsite the massive cuts todate, GM needs to be a company half its current size. GM has known this for years. The UAW leadership has known this also. Poltically it is something the UAW leadership has choosen not to acknowledge – failing to do so has weakened GM and the labor market where it’s membership must compete.    

3rd – GM needs to downsize its dealership network and supplier chain accordingly. http://blogs.motortrend.com/6295283/editorial/rightsizing-gm-the-number-that-counts/index.html  http://seekingalpha.com/article/112598-the-arduous-sometimes-impossible-task-of-closing-down-car-dealerships , http://www.autoremarketing.com/ar/news/story.html?id=9062 , http:www.autonews.com/article/20080922/ANA06/809220374/1178 , http://www.cbsnews.com/stories/2006/02/10/ap/business/mainD8FMI6AG2.shtml

4th – GM’s new product line must hit the mark. The greatest fear for GM should be that the Government will now mandate the production of autos that the American Public does not want to buy. The impact of the “Green Agenda” on the US Auto Industry is a topic for a different post – https://mcauleysworld.wordpress.com/2008/11/07/obama-granholm-pelosi-waxman-dingell-the-death-of-american-automobile-manufacturing/

As to Chrysler and the 30 days it has to complete restructuring and to find a partner. Beware of Audi. The Main Stream Media and Political Shysters like Michigan Governor Granholm have over hyped Audi’s potential as a savior. Granholm believed the Obama Administration would pour $100’s of billions into her state – incorrectly. Chrysler needs to continue it’s desperate hunt for a partner. Don’t put all of your eggs in the Audi basket ….

Fiat-Chrysler Link Is Nice Idea, but Futile Without Money : Fiat S.p.A.’s acquisition of 35 percent of Chrysler has all the good-sounding trappings of an auto-industry alliance that, under normal circumstances, would indicate another industry tie-up that might bear fruit. The terms of the alliance, as presented, bring from Fiat no capital that could be used to shore up Chrysler’s foundering day-to-day operational outlook. While an arrangement that might — comparatively quickly — lead to new models for gaps in Chrysler’s product range and increased utilization for some of its manufacturing plants is a solid strategic step, it’s not a tactical solution to the overriding predicament: Chrysler needs cash and needs it now. http://www.autoobserver.com/2009/01/commentary-fiat-chrysler-link-is-nice-idea-but-futile-without-money.html

Chrysler’s Italian Job on the American People : 

Is there any doubt that when government starts to tinker with industry all sorts of nutty things come to pass? How about the proposed “global strategic alliance” between Chrysler and Fiat? Apparently, there is only one way to make Chrysler competitive with foreign car makers in the U.S.. And that is to have U.S. taxpayers put up $7 billion to essentially fund another foreign car maker’s takeover of Chrysler. This swindle isn’t just pazzo–it is plain wrong. Hopefully, it will be killed before it ever makes it to Congress. The alliance is contingent on $3 billion in additional U.S. government loans to Chrysler. “The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.” http://blogs.wsj.com/deals/2009/01/21/mean-street-chryslers-italian-job-on-the-american-people/?mod=msn_money_ticker

The last thing America needs is for Fiat to suck the remaining life out of Chrysler, along with wheelbarrows of taxpayer cash, and take both back to Italy. 

A straught out bankruptcy reorganization maybe a much better option. The sale of Chrsyler’s parts, Jeep, Dodge and Chrysler would leave three smaller, nimbler and more easily managed businesses. Given additional cost reductions, three such companies could be in a position to succeed in the years to come. 

As to the UAW Members – quick blaming the transplants for your woes. Your fellow American citizens are competing head up. If automakers in Detroit at at a disadvantage why don’t you look to the leadership in your state. The Federal taxs laws apply uniformly to all companies, regardless of which state they are loacted in. Why don’t you research how Michigan’s Property Tax, Business Income Tax, Use Taxes, Sales Taxes, Gasoline Taxes and various City Taxes impact the price of your product. Quit blaming Washington – The problem is and has been much closer to home. 

US labor costs are $800 higher per car then their Japanesse counterparts – yet US autos sell for an average of $2,500 less then the comparable Foreign competitor. “So the loss of U.S. market share must be due to consumers’ perception that U.S. vehicles have much lower quality than Japanese ones. Even the lower prices for U.S. vehicles are not enough to convince U.S. consumers to switch from Japanese to U.S. models.” http://www.bloggingstocks.com/2008/12/10/do-uaw-workers-make-73-an-hour-does-it-matter/

There is the problem. A problem Government bailouts can’t help.

Will Obama Ignore Public & International Opinion – The New Auto Bailout – Tell Congress No More Bailouts

President Obama ackknowledged how unpopular the Bailout of the Detroit Auto Industry was during his infamous 60 Minutes interview this past Sunday. For those of you who may have missed it, here is a replay …..

The fact the President understands this sentiment makes the following article even more disappointing.

Washington’s reluctant auto bailout

The government isn’t happy about giving GM and Chrysler more money. But the two struggling automakers still are likely to get another big loan by March 31.

NEW YORK (CNNMoney.com) — General Motors and Chrysler LLC have about a week or less before they find out if they’ll get the additional help they need from taxpayers, creditors and unions to avoid bankruptcy.

What they already know is that any assistance they receive won’t be given happily.

The two companies face a March 31 deadline to win concessions from bondholders and unions in order to prove to the Treasury Department that they can be viable in the long term. Without such a finding, the government can recall the $13.4 billion it has already lent to GM and the $4 billion it loaned to Chrysler.

Few expect Treasury to take such a drastic step. Still, it’s clear that the automakers need more than the loans they already have received. Chrysler is on record as saying it needs as much as $5 billion in additional funds by March 31 to avoid being forced into bankruptcy.

And while GM now says it doesn’t face an immediate cash crunch, it has asked for up to $16.6 billion more in federal assistance, with most of that needed later this year. Its auditors have even said there is significant doubt about GM’s ability to stay in business without more loans. [The “immediate cash crunch” was avoided by having the Government assume responsibility for $5 Billion in payments owed to Auto Parts suppliers by GM & Chrysler – without that payment – agreed to earlier this month – both GM & Chrysler would currently be out of cash. http://money.cnn.com/2009/03/19/news/companies/auto_parts_bailout/index.htm?postversion=2009031919 ]

But it’s growing less certain that GM will be able to get enough concessions from its creditors to satisfy the government. On Sunday, an ad hoc committee of leading GM bondholders issued a statement saying they were not ready to agree to swap their current notes for a combination of new debt and stock.

According to the letter released by the bondholders’ financial advisors, the creditors are concerned GM may be headed for bankruptcy since the rebound in auto sales that the company is calling for in the turnaround plan it submitted to the government last month may not occur.

Without the government agreeing to give the bondholders some protections or more cash upfront, GM and Chrysler might not be able to restructure their debt in the manner called for in their turnaround plans. And without shedding debt, it will be difficult to win the necessary additional cost savings from the United Auto Workers that the union has already granted Ford Motor.

Shelly Lombard, lead auto analyst for debt research firm Gimme Credit, said it will be tough for GM and Chrysler to get approved for additional loans if they are unable to get more concessions from the creditors and the union. And she said a deal with creditors is looking more and more unlikely.

Obama’s tough talk

Perhaps most troubling for GM and Chrysler though is the fact that President Obama said in an interview on “60 Minutes” Sunday that while he wants to help the companies stay out of bankruptcy, they have yet to prove that they can remain viable. [Wasn’t that the deal – $13.4 Billion in cash and don’t come back without a plan showing you can be “viable”?]  

He acknowledged that, given the political uproar over bailouts in general, it may be difficult for his administration to agree to further help for the automakers while it is also fighting for a controversial bank rescue package that Obama said is his top economic priority.

“I just want to say the only thing less popular than putting money into banks is putting money into the auto industry,” Obama said during the interview.

Still, the automakers remain hopeful, at least on the record, that the federal help they are seeking will be approved in time to avoid bankruptcy.

They point to the $5 billion bailout of the auto parts sector announced by the Treasury Department last week as a sign that the Obama administration is committed to saving the automakers — even though a member of the government’s auto industry task force cautioned reporters that help for GM and Chrysler was a separate issue from loans for the parts makers.

The member of Obama’s auto industry task force, who spoke to reporters last week on the ground that his name not be used, said to expect some kind of announcement from Treasury about what’s next for GM and Chrysler ahead of the March 31 deadline. But he cautioned that won’t settle the issue.

“I don’t expect what we say before March 31 will be the final word on this situation,” he said. “It’s very big, very complicated.”

And that’s why Schnorbus and others say they expect negotiations between the automakers, government, creditors and the UAW will well go beyond next Tuesday’s deadline.

“I’m inclined to think they’ll get just enough federal help to keep the lights on,” Schnorbus said. “Treasury will give them a lifeline. But even with that, they’ll still be a long way from safely being out of harm’s way.”   http://money.cnn.com/2009/03/24/news/companies/automakers_bailout/index.htm

[The Government is considering putting more taxpayer money at risk! Why? To payback Union bosses? If helping GM and Chrysler were sound  business decisions, there would be a private market solution. Let them enter Bankruptcy and let the marketplace “buy” the viable parts of the Companies – like Tata’s purchase of Jaguar & Land Rover]      

Meanwhile Industry experts are raising additional “ed flags over the survival of GM & Chrysler. http://money.cnn.com/2009/03/11/autos/gm_trouble.fortune/index.htm?postversion=2009031112

GM has more troubles than you think

Bad cost-cutting ideas, poor efficiency and lousy cars – it’s going to take a lot more than the Volt to save General Motors.

NEW YORK (Fortune) — For the past several weeks, I’ve been trying to put myself in the shoes of the Treasury Department’s auto task force to figure out what its members should ask General Motors to do in order to become competitive again.

It isn’t easy, and here’s why:

The viability plan that GM submitted to the government is all about getting smaller – but it says very little about getting better. Fewer nameplates, fewer brands, fewer workers, fewer dealers – that’s supposed to be the way down the yellow brick road. Once GM gets sized right and gets its costs in line with its revenue, The Land of Oz awaits as soon as the market comes back.

To me, that is a fatal flaw. One of the oldest laws in business is that you can’t cost-cut your way to prosperity. And who knows when the market will come back?

Now lower costs are a necessary condition for GM’s survival. But they aren’t sufficient, because the automaker ranks below its biggest foreign rivals in operating smarts.

For one thing, GM isn’t as clever as Toyota and Honda about sharing parts among different models. According to an analysis of platform efficiency by CSM Worldwide, a Detroit-based forecasting and consulting firm, Toyota makes an average of 406,000 cars from each basic architecture, while Honda gets an amazing 509,000 cars. Higher volume means lower costs per car. So when GM by comparison, spins out a mere 350,000 units, it can’t hope to save as much.

Nor does GM run its plants as efficiently. When last measured by CSM, GM was operating at just 73% capacity, while Toyota was at 86% and Honda at 93%. Plants carry lots of fixed costs and burn a lot of cash when they aren’t running at full speed.

BUT most importantly, GM just doesn’t make very good cars and trucks. In Consumer Reports’ latest scorecard on automaker performance, the automaker ranked 14th out of 15, or next to last. Only Chrysler scored worse.

The leaders were the usual suspects: Honda, Subaru, and Toyota. To make it worse, Consumer Reports won’t even give a recommended rating to some newer GM cars like the Buck Enclave or Cadillac CTS because of poor reliability.

It is true that GM gets pulled down by some of its older models, Consumer Reports points out. But it’s been making cars for 101 years. Shouldn’t all its models be at least competitive?

No other car company that I know of expects to get a pass by brushing off its mistakes the way GM does. Can you imagine Toyota dissing its old Camrys and Corollas, and saying, “Wait until you see next year’s model?”

For another thing, GM has also been pursuing a disastrously wrong-headed development policy on hybrids. While the automaker was working on systems for low-volume trucks and buses with no consumer visibility, Toyota and Honda were building popular-priced hybrids that average people could actually buy.

As a result, Toyota is coming to market with a third-generation Prius that carries an EPA rating of 50 miles per gallon. And Honda just announced that its new Insight, which gets 43 mpg on the highway, will sell for $20,000.

GM’s current contender in that race is the most popular version of the Chevy Cobalt, which gets 25 mpg with a conventional engine. Meanwhile, the company is imploring everybody who will listen to wait for its $40,000 Chevy Volt, a so-called “range-extended” electric vehicle due 18 months from now. The Volt has flashy mileage numbers but is very expensive and will have limited utility for most drivers.

Eventually, GM is going to get rid of all its excess overheard. But if I were voting on more government loans, I’d want to hear how it is going to do things faster, smarter, and better:

• How it is going to make its product development more responsive to actual customer needs.
• How it is going to overhaul its marketing and advertising to better understand its buyers and what GM needs to do to repair its reputation.
• And how to reform its distribution system to better serve customers.

I’m not confident that Treasury will ask the right questions, or that GM knows the answers. But I’m hoping. http://money.cnn.com/2009/03/11/autos/gm_trouble.fortune/index.htm?postversion=2009031112

GM auditors raise doubts about carmaker’s viability

DETROIT — General Motors (GM) was pushed a little closer to the brink on Thursday, getting a vote of no confidence from its auditors, who officially stated they don’t believe the automaker can continue as a going concern.

Although the “going concern” statement does little more than restate what GM itself had already said when it began asking for government aid last fall, the auditors’ statement forced GM to seek waivers from its creditors on loan agreements and could pose a significant handicap to its suppliers when they seek loans.

http://www.usatoday.com/money/autos/2009-03-05-gm-auditors-statement_N.htm

The Fate of Automaker Bailouts Elsewhere

Sweden says no to saving Saab

The Swedish government has responded to Saab’s desperate financial situation by saying, essentially, tough luck. Or, as the enterprise minister, Maud Olofsson, put it recently, “The Swedish state is not prepared to own car factories.” Governments all over the world are confronting the disintegration of the global automobile market in different ways, with loans, bailouts and takeovers. But Sweden’s approach has been particularly hard-nosed, and particularly unequivocal. “We are very disappointed in G.M., but we are not prepared to risk taxpayers’ money. This is not a game of Monopoly.” Saab was always known for its innovative engineering. But analysts say that in recent years, with General Motors’s emphasis on volume rather than individuality, it has lost its edge. “Under G.M.’s ownership, they denuded the intellectual content behind the brand,” said Peter Wells, who teaches at Cardiff Business School in Wales and specializes in the automotive industry. “Its products are not exciting enough, and Saab doesn’t have a strong brand identity anymore.” http://www.iht.com/articles/2009/03/23/europe/23saab.php

Germany not aiming to take Opel stake, Merkel says

BERLIN, March 22 (Reuters) – The German government is not aiming to take a stake in troubled carmaker Opel. Germany has said it decided to be sure no state support would find its way to GM. Opel has said it needs financial support to survive. http://www.cnbc.com/id/29826461

Political News

Monday, 25th March 2009

Jaguar Land Rover says does not want govt bailout

Struggling British luxury car maker Jaguar Land Rover said on Thursday it did not want a government bailout. Indian conglomerate Tata, the brand in the running to purchase Jaguar and Land Rover from Ford has been officially confirmed as the winning bidder. Ford made the announcement yesterday. The deal involves the transfer of Jaguar and Land Rover to Tata for $2.3 bn. Ford will not be keeping any stake in either brands, as it did when it sold Aston Martin last year.                                                                                               http://car-reviews.automobile.com/Jaguar/review/ford-says-tata-to-jaguar-and-land-rover/5574/

COMMENTARY: Fiat-Chrysler Link Is Nice Idea, but Futile Without Money

The deal is being considered by some as the salvation of Chrysler.  The prolongation of Chrysler’s likely dissolution is the more viable assessment of Tuesday’s announced Fiat-Chrysler deal because it includes no cash infusion to Chrysler. The terms of the alliance, as presented, bring from Fiat no capital that could be used to shore up Chrysler’s foundering day-to-day operational outlook. It’s not a tactical solution to the overriding predicament: Chrysler needs cash and needs it now. The Fiat deal is like offering a starving man a patch of ground, a shovel and some seeds, saying, “Here, this will take care of your hunger.” http://www.autoobserver.com/2009/01/commentary-fiat-chrysler-link-is-nice-idea-but-futile-without-money.html

Chrysler’s Italian Job on the American People

Is there any doubt that when government starts to tinker with industry all sorts of nutty things come to pass? How about the proposed “global strategic alliance” between Chrysler and Fiat? Apparently, there is only one way to make Chrysler competitive with foreign car makers in the U.S.. And that is to have U.S. taxpayers put up $7 billion to essentially fund another foreign car maker’s takeover of Chrysler.

This swindle isn’t just pazzo–it is plain wrong. Hopefully, it will be killed before it ever makes it to Congress.

It is of course a remarkable coincidence that the Chrysler-Fiat scheme has popped up only a few weeks before Chrysler is to present its case for stand-alone viability to the U.S. Treasury.  But then again, no one really believes Chrysler is viable on its own. Not even the Italians.The “global strategic alliance” is, in fact, a flimsy “nonbinding term sheet.” And money?  The alliance is contingent on $3 billion in additional U.S. government loans to Chrysler. “The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.” Chrysler of course is running out of cash. And that is where you, the taxpayer, come in. The real beauty of the Chrysler-Fiat proposal. There are few losers in it except you, the U.S. taxpayer.

Fiat also gets an option of buying outright control of Chrysler within 12 months for the whopping sum of $25 million. [Fiat can buy Chrysler for $25 million in 12 months. Chrysler wants $3 Billion in cash but will be sold for $25 Million. Can I get that Deal, please! For every $8,000 the Government puts on the table it will cost Fiat $25 to buy Chrysler. The American Taxpayer will be paying for Chrysler’s purchase by Fiat. $25 Million! Heck, the UAW lost $25 Million running it’s Golf  Course over the last 5 years.  http://www.thetruthaboutcars.com/uaw-pisses-away-23m-on-golf-course-retreat/  If the UAW has $25 Million to “piss away” on a private golf course they should put their money where their collective mouth is and buy Chrysler – instead of asking the American Taxpayer to do so].

http://blogs.wsj.com/deals/2009/01/21/mean-street-chryslers-italian-job-on-the-american-people/?mod=msn_money_ticker

Contact Washington Now – Tell Them To Say No To Additional Automaker Bailouts: http://www.usa.gov/Contact.shtml

YOUR TAX DOLLARS AT WORK – THE AUTO BAILOUT – 30 DAYS PAID VACATION

$17 Billion Dollars of Taxpayor Money for Two of the “Detroit 3” – General Motors and Chrysler are to receive $17 Billi0n Dollars in Taxpayor money. Ford Motor Company, Toyota Motor Company of American, Hundai USA, KIA USA, Honda of America, Volkswagon of America, nor any of the other Automobile Manufacturing Companies in the United States will, as a group, receive nothing in support of their activities in this Country.

What are GM and Chrysler doing for this $17 Billion Dollars?

Here is what they are not doing: They are not scheduling meetings with the UAW to work out a “NEW BUSINESS PLAN” that will allow the Companies to survive and prosper. They are not scheduling discussions with their supplier chain or sales and distrubution networks. They are NOT USING THE TIME TO FINALIZE THE SHUT DOWN OF THE “JOBS BANK PROGRAM” – THE PROGRAM THAT PAYS WORKERS NOT TO WORK, FOR UP TO 4 YEARS.

What are General Motors and Chrysler doing with your tax dollars – they a re closing their plants and shutting down production for 30 days – USING YOUIR TAX DOLLARS TO PROVIDE THEIR EMPLOYEES A 30 DAY PAID VACATION AT TAX PAYOR EXPENSE.

I wonder if you cab double dip – collect your “Job Bank Pay” not to work and get your 30 day paid vacation at the same time. I’m sure the UAW would consider that reasonable.    

Let your Congressperson know how you feel about this use of taxpayor dollars.

http://www.usa.gov/Contact/Elected.shtml

What Bailout Transparency? Banks Refuse To Disclose Where Money Is Going

IS THE AUTO BAILOUT NEXT?

Where’d the bailout money go? Shhhh, it’s a secret

By MATT APUZZO, Associated Press Writer

 

WASHINGTON – It’s something any bank would demand to know before handing out a loan: Where’s the money going? But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.

“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,'” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest?

None of the banks provided specific answers.

Some banks said they simply didn’t know where the money was going.

“We manage our capital in its aggregate,” said Regions Financial Corp. spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout.

The answers highlight the secrecy surrounding the Troubled Assets Relief Program, which earmarked $700 billion — about the size of the Netherlands’ economy — to help rescue the financial industry. The Treasury Department has been using the money to buy stock in U.S. banks, hoping that the sudden inflow of cash will get banks to start lending money.

There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money — not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that’s happening and there are no consequences for banks who don’t comply.

“It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry,” said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout.

But, at least for now, there’s no way for taxpayers to find that out.

Pressured by the Bush administration to approve the money quickly, Congress attached nearly no strings on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent.

“Those are legitimate questions that should have been asked on Day One,” said Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress. “Where is the money going to go to? How is it going to be spent? When are we going to get a record on it?”

Nearly every bank AP questioned — including Citibank and Bank of America, two of the largest recipients of bailout money — responded with generic public relations statements explaining that the money was being used to strengthen balance sheets and continue making loans to ease the credit crisis.

No bank provided even the most basic accounting for the federal money.

“We’re choosing not to disclose that,” said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.

Others said the money couldn’t be tracked. Bob Denham, a spokesman for North Carolina-based BB&T Corp., said the bailout money “doesn’t have its own bucket.” But he said taxpayer money wasn’t used in the bank’s recent purchase of a Florida insurance company. Asked how he could be sure, since the money wasn’t being tracked, Denham said the bank would have made that deal regardless.

Others, such as Morgan Stanley spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: “We are going to decline to comment on your story.”

Most banks wouldn’t say why they were keeping the details secret.

“We’re not sharing any other details. We’re just not at this time,” said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government.

Heine, the New York Mellon Corp. spokesman who said he wouldn’t share spending specifics, added: “I just would prefer if you wouldn’t say that we’re not going to discuss those details.”

Lawmakers say they want to tighten restrictions on the remaining, yet-to-be-released $350 billion block of bailout money before more cash is handed out. Treasury Secretary Henry Paulson said the department is trying to step up its monitoring of bank spending.

“What we’ve been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we’re doing this,” Paulson said at a recent forum in New York. “So we’re building this organization as we’re going.”

Warren, the congressional watchdog appointed by Democrats, said her oversight panel will try to force the banks to say where they’ve spent the money.

“It would take a lot of nerve not to give answers,” she said.

But Warren said she’s surprised she even has to ask.

“If the appropriate restrictions were put on the money to begin with, if the appropriate transparency was in place, then we wouldn’t be in a position where you’re trying to call every recipient and get the basic information that should already be in public documents,” she said.

Garrett, the New Jersey congressman, said the nation might never get a clear answer on where hundreds of billions of dollars went.

“A year or two ago, when we talked about spending $100 million for a bridge to nowhere, that was considered a scandal,” he said.

___

Associated Press writers Stevenson Jacobs in New York and Christopher S. Rugaber and Daniel Wagner in

WHEN CONGRESS PASSED “TARP” THEY PROMISED THE AMERICAN TAXPAYOR COMPLETE TRANSPARENCY – CONTACT YOUR CONGRESSPERSON AND DEMAND TO KNOW WHERE YOUR TAX MONEY IS GOING !  NO MORE BAILOUT FUNDS !

http://www.usa.gov/Contact/Elected.shtml

 

Lame Duck Bush Caves In To Auto Bailout / Bush Places His Legacy Ahead Of Country’s Best Interests

Outgoing Presdient Bush sealed his legacy with Republicans and Conervatives today when he caved into his own self impoosed pressure to complete a “bailout” of the “Detroit 3” against the wish of the American Public.

Public opinion polls show resounding opposition to a “Bailout” of the “Detroit 3” and despite this opposition, Bush choose a path he believes will improve his “legacy” with the American people.

Once again, Bush has failed to consider the unintended consequences and ultimate costs his decisions will have for  the American taxpayor.

BUSH HAS PLACED HIS CONCERN FOR HIS OWN LEGACY OVER THE BEST INTERESTS OF THE AMERICAN PEOPLE.

The Political Bull Shit is just unbelievable. The “Bailout” is referred to as a “loan”, yet no one believes the ‘Detroit 3″ can “repay” the loans if the meaningless conditions imposed on the “loans” are not met. The “Auto Bailout” blueprint has been borrowed driectly out of the “TARP” plan and fund – none of the conditions placed on the “TARP” program have been implemented.   http://www.msnbc.msn.com/id/28311743?GT1=43001

Bush promised the “Detroit 3” 17 Billion in Taxpayor money – to be provided from the “Troubled Asset Relief Program” or TARP – a fund never intended to provide such funding. http://www.msnbc.msn.com/id/28311743?GT1=43001  So instead of buying “troubled assets” or mortgages the “TARP” will not be used to pay UAW members 85% of their salaries not to work …. Brillant, just brillant!    

Bush stated that “letting the Auto Companies collapse is not a responsible course of action”.  What a ridiculous proposition. Letting failed companies collapse is exactly what the Government does every day – The US Government does not guarantee the success of failed businesses – nor should it support failed business at the expense of successful businesses as Bush now proposes.

Bush pretends to propose a whole new set of “conditions” for receiving the “loans”, “conditions” which are identical to the unkept promises made by Congress when they passed the “TARP” legislation. The “conditions” are nothing more than “political window dressing” to limit the public criticism of this failed President and his failed Congress.

Treasury Secretary Henry Paulson is to provide the funding from the “TARP”, this despite the fact that Paulson refuses to account for the spending that is being undertaken under the “TARP” program ……

Harvard Law Professor Elizabeth Warren, the Chairwoman of the Congressional Oversight Panel for the “TARP”, continues to express her frustration over Paulson’s failure to account for how he is spending the Billions of dollars of Taxpayor money under  ‘TARP”.   http://www.foxnews.com/politics/2008/12/18/bailout-watchdog-wheres-spending-plan/    

AND THIS IS THE MAN WHO WILL PROVIDE AN ORDERLY “BAILOUT” TO THE “DETROIT 3” – AS OPPOSED TO THE ORDERLY ADMINISTRATION OF THE BANKRUPTCY COURTS.

I DOUBT PAULSON WILL  EVEN BE ABLE TO PROVIDE AN ACCOUNTING OF  WHERE THE MONEY HAS BEEN SPENT.

The Bush “handout” pays “lip service” to the “Detroit 3” completing a “restructuring program” – the same “restructuring programs” Congress demanded from the “Detroit 3” when they returned to Congress on December 2 –

You might recall that the “Detroit 3”  returned “empty handed”  to Congress in December  – that is right, they retruned without any type of plans – just renewed requests for taxpayor money.

The penalty for not having completed a plan to justify the requested loan – nothing – Bush granted $17 Billion in loans without any type of “reorganization plan”. A “take the money first” and come back with a plan later, if you like, approach. No wonder the “Detroit 3” can’t get a loan in the public market place – the Banks want to see the “restructuring plan” upfront.  

This is just incredible. Do you know that the amount loaned to the “Detroit 3”  is equal to every family in the Country making a $5,000 personal loan to the “Detroit 3”. If the professional lenders wouldn’t ake the loan with an “upfront” restructuring plan” why did Bush make that commitment on our behalf.   

I, like the the rest of the overwhelming majority of Americans, are opposed making such a loan.

WHY DOESN’T CONGRESS STEP IN AND STOP THIS?

THE UAW IS ALREADY STATING IT WILL MAKE NO FURTHER CONCESSIONS, GEE WHAT A SURPRISE.

The UAW has idled “Detroit 3” plants with strikes twice in the last 14 months. The UAW lies to its membership when it failes to admit the “true” hourly “all in costs” of its labor contracts. Neither the UAW nor its membership believe that concessions are necessary. It is no wonder that the ‘Detroit 3″ is stuck with a failed business model.  

Don’t you think that if a “voluntary” means of spanning these differences was possible, that path would have already been taken. Throwing $17 Billion down the drain while the Detroit 3/ UAW continue on as usual is a ridiculous path to follow. 

So what happens in 3 months after $17 Billion of “good” taxpayor money has been trown down this rathole – and the “Detroit 3” have produced no restructuring plan …… Does anyone really think the Detroit 3 will suddenly find the money to repay the loans – of course not. Everyone in Washington knows the money will be “lost”. No one is predicting that the economy is going to turn around in 90 days – in fact – the predictions correctly predict a continued worsening of the economy for the next 12 months – maybe longer if the Government continues to prusue the failed “Bailout” and “Loan”  policies.  

Do you think there will be a sudden demand for the product currently being produced by the “Detroit 3”. To imply that will happen is simply fiction. Gee, is the American public lining up to buy a “Volt” –  GM’s electrical car that won’t even come to market for 2 years and then the owners of the Volt can look forward to recharging their vehicle every 30 miles.  Is this is the vehicle that will save GM in the next 90 days?

So what happens in 90 days? Is GM or Chrysler going to be economically viable? NO they won’t! Will the American Taxpayor be robbed of additional funds to continue  to pay UAW members 85% of their salaries not to work? (YES, THE JOB BANKS ARE STILL OPERATING AT FULL STEAM).

Bush’s bailout of the “Detroit 3” is really nothing more than an adoption of the Plan proposed by House Democrats, the same Plan that was rejected by the American People and the Senate Republicans. 

This “Bush Bailout” does nothing to “demand” or require any changes by the ‘Detroit 3″/UAW – changes necessary for the “Detroit 3” to survive and prosper.

Listen closely to what the “Detroit 3/UAW are saying – they don’t really believe fundamental change is required – thus they are doomed to fail – it will jst be a matter time and of how many Taxpayor dollars are spent making “political paybacks” before the American public says enough is enough.

So the curtain comes down on the last term of Bush’s Presidency. As the curtain closed Bush choose a path he thought might improve his legacy, not the path that was best for America or the “Detroit 3”.

When it really mattered most for the American public, Bush placed his concern for how he might be remebered in the short term over what was “right” for America in the long run. A final serving serving act of a failed Presidency.

This “Auto Bailout” will not improve the “Bush legacy”. Unfortunately the “Auto Bailout”, like the “TARP” or “Bank Bailout” will prove to be a failure. By ignoring the American Public’s opposition to this bailout, Bush has succeeded in alienating his last group of supporters.

The “Bush Legacy” is certainly one of his own making.

The Current $17 Billion Dollars Fails to Provide Loan Guarantees for Ford Motor Company – The Proposal Provides An Immediate $9.4 Billion to General Motors (Over 3 times the present value of  GM – The Government could have bought General Motors for 1/3 of  the loan amount). The Plan calls for an immediate  $4 Billion For Chrysler (an amount over 3 1/2 times the current value of Chrysler company – again the Government could have bought the Chrysler for 1/3 the loan amount)    

Providing loan amounts in excess of 300% of a Company’s Market Value Would Never Happen In The Private Marketplace.