One of the many reasons for Ford’s surging market share are Americans who refuse to buy a car from a company that has been bailed-out with their tax dollars. In survey after survey after survey, Americans took issue with the bailouts. The backlash was so severe that one of the first measures Joel Ewanick implemented at GM was to get rid of GM. He replaced “General Motors” with “the parent company.” Smart move: You can be against Government Motors. But who dares to be against parenthood?
Ford meanwhile rode high on the perception that they didn’t accept a single dollar. “Ford did not seek a government bailout,” says a very recent Rasmussen Report, “and 55 percent of Americans say they are more likely to buy a Ford car for that reason.”
Americans (and possibly GM and Chrysler) are the victims of a big lie, says Wall Street insider Eric Fry. And he has the numbers to back it up.
“During the crisis of 2008-9, for example, Ford Motor Company borrowed as much as $7 billion from a lending facility of the Federal Reserve. But the details of these borrowings did not come to light until just three weeks ago. And even now, very few investors – or car-buyers – seem to realize that GM and Chrysler were not the only “Big 3” car companies to receive a helping hand from the government. Ford also cashed a few government checks.”
Fry is not talking about the DOE retooling loan, and Ford’s well publicized use of government loan guarantees. Fry found a $7 billion government check to Ford that was hidden from the public’s eye. Well, not really, it was mentioned on page 18 of a document submitted by Ford to the Senate Banking Committee on December 2, 2008, but who reads that stuff?
While Americans learned that a TARP was not just used to cover some dirt in the yard, but also gaping holes in the balance sheets of banks, brokers and automakers, the public remained oblivious to other governmental ATMs, such as the Fed’s Commercial Paper Funding Facility (CPFF). Says Fry:
Just one month before Mulally declared, “We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government,” Ford Motor Credit had borrowed nearly $4 billion from the Fed’s Commercial Paper Funding Facility (CPFF). And just two weeks after this remark, Ford Motor Credit borrowed an additional $3 billion from the CPFF. In all, Ford borrowed $7 billion between October 27, 2008 and June 17, 2009.
Knowing that he will be torn to shreds unless he has impeccable evidence, Fry presents a complete timeline, from the first withdrawal from the CPFF on 10/27/08 through Fords refusal of government aid on 1/29/09 (same day: Ford Motor Credit rolls over $1.488 billion of CP with the CPFF) to multiple transactions in the summer of 2009.
Follow the timeline, and read the article in Fry’s article at The Daily Reckoning.
Interestingly, Fry does not blame Ford or Mulally for taking the money:
“Mulally deserves no blame for availing himself of funding that was freely – if very privately – provided by the Federal Reserve. After all, Mulally’s Wall Street counterparts were already busy tapping various credit facilities at the Fed. So can we blame Mulally for thinking to himself, “Hey, I’d like to tap that too!”?
Fry doesn’t want to “cast stones at Mulally.” He wants to “catapult boulders at the Federal Reserve, and by extension at the exalted notion that institutionalized secrecy is an essential component of “guiding” a free market economy.” Fry’s assertion: Not Ford lied to America. The American government, the Federal Reserve and the Treasury Department did.
“To reiterate, we don’t blame Mulally or Ford for taking advantage of an advantageous situation. We blame the Federal Reserve (and the Treasury) for nourishing an environment of preferential treatment, non-disclosure, backroom deal-making and every other form of capricious market manipulation.”