By on December 21, 2010

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.

From March 2009 through August 2009, Ford was the biggest borrower from that heretofore undercover lending facility for carmakers in need.

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.

Says Fry:

“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.”

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73 Comments on “Blue Ops: The Clandestine Bailout Of Ford...”


  • avatar
    NormSV650

    Look, they’ve circled the problem! :)

    With negativity towards Jap cars decreasing quality standards based on recalls and fly over country needed to get behind some thing American that was not related to government, GM, nor Chrysler would be the first to turn too. Ford being quazi family run and not by blue suit board members and CEOs it was the best choice for the home team.

    Will this be the next Ford bubble? Quality rating and customer satisfaction surveys will determine if this bubble needs adjustment.

  • avatar
    ClutchCarGo

    If you take a look at the books of the Fed CPFF you’ll find that almost every major corporation used the facility in late 2008/early 2009. The commercial paper market (a critical source of short-term liquidity that is absolutely vital to the smooth financial functioning of all major operations) froze solid in Oct 2008 with the failure of Lehmann Bros. The abrupt failure of Lehmann bonds caused some major money market funds to “break the buck” (a $1 share in the fund became worth less than $1), which in turn seized up the short term capital markets. No one would lend in the commercial paper market out of fear that the borrower might go broke and not pay up. The Fed had to step in to provide the commercial paper market some security so that normal financial functions of viable companies could continue, Ford included.

    If using the CPFF was a Ford “bailout”, then everyone who used the fund got the same “bailout”. And many of us who got paid during that time period got the benefit of that “bailout” (since companies use commercial paper to make their regular payroll while awaiting their accts receivable to roll in).

    • 0 avatar
      jmo

      +1
       
      I’m a little troubled by Ed and Bertel’s recent forays into things they know nothing about.

    • 0 avatar
      Silvy_nonsense

      Companies take government assistance in the form of cheap loans, tax breaks and subsidies of all sorts all the time. New factories are opened and new products are developed in both “blue” and “red” states all with financial help from the state and federal government. These aren’t examples of bailouts, these are examples of business as usual.

      Ford took advantage of a cheap loan program. The government didn’t get any ownership interest in Ford as part of the deal. These loans came at a critical time but were still just extensions of the assistance that governments hand every day.

      In contrast, the Federal government nationalized both GM and Chrysler. The taxpayers own the companies. Taking ownership is extraordinary and that’s what most of us are talking about when we refer to a “bailout”.

      I’m looking for journalists who can accurately decipher the machinations of the auto industry, help me understand the companies’ actions in context and provide insightful commentary. If Bertel Schmitt can’t understand the difference between nationalizing a company and providing a loan to a company, he’s probably not well suited to be writing about the business side of the auto industry.

      Articles like this give me the impression that TTAC isn’t concerned with providing quality information that may buck conventional wisdom as much as it is concerned with generating controversy to increase readership. In a worst case scenario, articles like this give the impression that the editors are in over their heads when it comes to understanding and reporting on the complexities of the auto business.

    • 0 avatar
      Norma

      “Ford did not seek a government bailout”

      Shame to the hypocrisy of Corporate America, shame to Ford Motor.

    • 0 avatar
      rnc

      Wasn’t that facility made to FMC and not Ford, there’s a signficant difference b/t the two, the government wanted credit available so people would purchase and the quickest way to do that was to open the window rates so that companies could offer very low interest rates with significantly reduced risk and try and keep the economy going, I mean they really didn’t know if it was all just going ot fall apart at the time, they just threw money (and they’ve gotten huge chunks of it back).  Now freddy, fanny, AIG and probably soon Sally will all be government wards or liquidated in some way, as 3 of the 4 should have never existed and the fourth should have been liquidated with every counter party taking thier part of the pain) 

    • 0 avatar
      stuki

      While Ford’s grant of Federal funds came via different pathways than GM’s, they nonetheless took government funds. Hence, the notion that ‘I won’t buy a GM/Chrysler car because they “behaved unamerican/uncapitalist” by taking money from the government’, seems much less substantiated in light of this.
       
      Of course, in reality, all the asset pumping via QE 1,2,….., cash for clunkers, zero interest rates, bankster welfare and whatnot, all were designed to, and served only to, shift wealth in the direction of retail goods peddlers and away from Joe saver. So it’s not like this particular funding vehicle was the only way Mulally got government help to hawk more cars. But the news is still interesting, in that it serves to further narrow the actual difference between what Ford got, and what GM / Chrysler got. And if publishing that piece of news helps widen (or narrow) some buyers list of “acceptable nameplates” the next time they bu a car, that makes it news worth publishing.
       

  • avatar
    Educator(of teachers)Dan

    “Hey, I’d like to tap that too!”? That’s what he said!
     
    I was never foolish enough to think that any of the automotive companies who do business in the US don’t get a little government money somewhere.  The only thing that differs is the amounts.  From GMs billions upon billions to the millions that don’t go into state government coffers when someone like Hyundai or Kia decides to build a plant here and gets big fat tax breaks, everyone get’s their piece of the pie.
     
    The only foolish thing is for a company to go around saying they don’t need any government money.

    • 0 avatar
      psarhjinian

      The only foolish thing is for a company to go around saying they don’t need any government money.

      Yeah, well, it plays very well to the kind of person that holds up “Get your government hands off my Medicare” signs.

      Government in some form is necessary to maintain things like, oh, contract and property law, never mind things like roads, energy supply, and so forth.  In that sense, the very wealthy do very well by government because the security of their wealth and the infrastructure that helps them maintain and grow it is essentially socialized, whereas the very poor get comparatively little benefit from government.

      Personally, I’d like a little acknowledgement of that fact once in a while.  Paying your fair share of taxes would be a nice start.  Having the gall to complain about regulation when said regulation is what ensures a stable market for goods and services that they make money off of comes across as more than a little hypocritical.

    • 0 avatar
      mikey

      @ Psar….Every time I read one of your interesting obsevations, I find myself moving a micro inch further to the left.

    • 0 avatar
      geeber

      The wealthy pay more than their fair share of taxes. In the case of the federal income tax, the bottom 47 percent of taxpayers do not pay the tax. The wealthy pay a higher percentage of the federal income tax now than they did in the 1950s, when tax rates on the top earners were at 90+ percent. Why? Because while lowering rates, we’ve also closed many loopholes, which has been the proper course.

      And it’s the poor and the lower middle classes who benefit from tax expenditures, not the rich. The rich can buy their way out problems with private schools, private security forces, treated water, etc. The poor bear the brunt of dysfunctional schools, lack of police, dirty water and overall unsanitary conditions, because they cannot afford to pay for substitute services. Where are the poor better off – in Haiti or the United States?

      And please note that not every regulation is good. While a knee-jerk opposition to any proposed regulation is annoying, so is a knee-jerk support of it. Not all regulation is effective or even beneficial. I hope that no one on this site is going to be dumb enough to defend Prohibition, the 55 mph speed limit, or the ignition interlock required for all 1974 cars.

    • 0 avatar
      aspade

      The notion of the corporate money class as ingrate Randians against the government structured market that made them rich is a sham.  The very wealthy and the government are the same people. When they talk about more regulations and taxes on business and the rich, what they mean is smaller businesses and the less rich. 

      To make sure they stay that way.

    • 0 avatar
      ClutchCarGo

      The wealthy pay a higher percentage of the federal income tax now than they did in the 1950s, when tax rates on the top earners were at 90+ percent. Why?

      Perhaps it’s because they take so much more of the total income than they did in the ’50s, such that even with a top rate just one third of the rate back then they still have to pay the lion’s share. Of course, they still get to keep the remaining 65%.

      And it’s the poor and the lower middle classes who benefit from tax expenditures, not the rich.

      Nonsense. It’s the rich who hold the wealth that is protected by govt security functions and regulation (SEC, FBI, etc.) and it’s the rich who build their wealth by availing themselves of govt infrastructure such as roads and markets. At best, the poor are protected by the govt from the worst depredations of the rich.

    • 0 avatar
      geeber

      ClutchCarGo: Perhaps it’s because they take so much more of the total income than they did in the ’50s, such that even with a top rate just one third of the rate back then they still have to pay the lion’s share.

      All of which is irrelevant to my main point – that the rich pay a higher percentage of federal income taxes today than they have at any time since World War II.

      ClutchCarGo: Of course, they still get to keep the remaining 65%.

      Last time I checked, 100 percent of it is their money.

      ClutchCarGo: Nonsense. It’s the rich who hold the wealth that is protected by govt security functions and regulation (SEC, FBI, etc.) and it’s the rich who build their wealth by availing themselves of govt infrastructure such as roads and markets. At best, the poor are protected by the govt from the worst depredations of the rich.

      Wrong. The poor benefit far more from effective law enforcement and good roads, schools and sanitary conditions than the rich do. The rich can afford to send their children to private schools, hire private security forces or buy bottled water. Im other words, they can “buy” their way out of a dysfunctional society.

      The poor cannot do this, or, if they do, it takes a much higher percentage of their income than it does for a rich person to pay for these goods and services.

      It’s not just the rich who benefit from steady, secure markets, or the enforcement of property rights. Safe markets and property rights encourage the production of food, which, in turn, encourages farmers to sell the excess to the city residents. This lowers the costs of goods for everyone, especially the poor. And the FBI isn’t just there for the rich – it investigates more than securities fraud, for example.

      ClutchCarGo: At best, the poor are protected by the govt from the worst depredations of the rich.

      The vast majority of poor people are victimized by other poor people, not the rich. This is why a functioning police department, for example, is so important to the poor.

    • 0 avatar
      ClutchCarGo

      All of which is irrelevant to my main point – that the rich pay a higher percentage of federal income taxes today than they have at any time since World War II.

      It’s entirely relevant – the rich pay a higher percentage of fed income taxes today because they GET a much higher percentage of the income available than at any time since WWII. It’s the enormous disparity in income between the rich and the poor that drives the difference in taxes paid.

      Last time I checked, 100 percent of it is their money.

      And 100% of it is my money and 100% is yours. Do we not need to pay for govt?

      Wrong. The poor benefit far more from effective law enforcement and good roads, schools and sanitary conditions than the rich do.

      Only the very rich can provide their own basic services like security and schools, and even those would be nearly impossible if some form of those services were not available to the poor. How effective will rent-a-cops be against unrestrained, armed gangs? How will companies create wealth with illiterate workers? The rich can’t completely insulate themselves from a dysfunctional society. The protection of property rights and fair trade are valuable to people in direct proportion to the property that they hold and the trading that they do in the markets. The rich need these things vastly more than the poor.

      The vast majority of poor people are victimized by other poor people, not the rich. This is why a functioning police department, for example, is so important to the poor.

      And how is that protection working out for the poor? I don’t know about where you live, but around here it seems that the level of police protection is in direct proportion to the income level of the community. And while the most immediate and visible victimization of the poor is committed by other poor people (those nearest to them), worse crimes are committed against the poor in terms of substandard education, degraded environment and infrastructure, and a denial of basic human needs like shelter and health care even for the working poor. Who commits/perpetuates those crimes?

    • 0 avatar
      FleetofWheel

      “the rich pay a higher percentage of fed income taxes today because they GET a much higher percentage of the income available”
       
      Wrong, the rich CREATE a much higher percentage.
       
      There is not some fixed amount of income floating around and unfairly taken by the rich.  To think the peasant class creates the majority of wealth and the sneaky rich steal it sounds like some Hugo Chavez theory of innovation and production.
       

    • 0 avatar
      ClutchCarGo

      Wrong, the rich CREATE a much higher percentage.

      Seriously? The people who made billions selling CDOs of sub-prime mortgages created real wealth? The people who made billions shorting those CDOs via credit default swaps created real wealth? J. Allen Smugbutt III who inherited millions from J. Allen Smugbutt II created anything? The “peasant class” are nearly the only ones left in this country actually DOING something (and I count myself amongst that “peasant class”), and without US generating real output of some kind the CEOs and financiers of the world would have nothing to manage and/or exploit. Yes, the capital and mgmt of the rich faciltates the “peasant class” to have some work to do, and they should reap rewards accordingly, but it’s absurd to say that their capital and/or mgmt alone is largely responsible for the creation of wealth. It’s just that they apply the Golden Rule: He who has the gold makes the rules.

    • 0 avatar
      stuki

      ” the millions that don’t go into state government coffers when someone like Hyundai or Kia decides to build a plant here and gets big fat tax breaks, everyone get’s their piece of the pie.”
       
      Dude, me abstaining from coming over and taking your money, is hardly the equivalent of me giving you something :)
       
       
      “The only foolish thing is for a company to go around saying they don’t need any government money.”
       
      In a world where said company already has to pay a fortune to said government, who then turns around and hands chunks of it to the company’s competitors, you are probably right. And in this age of glorification of progressive hell holes, that may be the only realistic scenario a company faces, with everything else at best being idealistic fantasy. But that being said, the above still comes some ways short of gravity for universal applicability.

    • 0 avatar
      geeber

      ClutchCarGo: It’s entirely relevant – the rich pay a higher percentage of fed income taxes today because they GET a much higher percentage of the income available than at any time since WWII. It’s the enormous disparity in income between the rich and the poor that drives the difference in taxes paid.

      What is relevant is that, in the 1950s, the bottom 47 percent were not completely exempt from paying the federal income tax, as they are today. The “wealth distrubution has changed” argument is a red herring. It has not changed that greatly over the last 50 years.

      And people don’t “get” money. They earn it.

      ClutchCarGo: And 100% of it is my money and 100% is yours. Do we not need to pay for govt?

      You need to tell that to the 47 percent who do not pay any federal income taxes. The taxpayers in the upper income brackets have been paying for government.

      ClutchCarGo: Only the very rich can provide their own basic services like security and schools, and even those would be nearly impossible if some form of those services were not available to the poor. How effective will rent-a-cops be against unrestrained, armed gangs? How will companies create wealth with illiterate workers?

      Which proves my point that the poor benefit more from government expenditures than the rich. Thank you.  

      ClutchCarGo: The rich can’t completely insulate themselves from a dysfunctional society. 

      You are correct that no one can completely insulate themselves from the side effects of a dysfuctional society. But it is indisuptable that the rich can better insulate themselves from a dysfunctional society than the poor are able to do.

      ClutchCarGo: The protection of property rights and fair trade are valuable to people in direct proportion to the property that they hold and the trading that they do in the markets. The rich need these things vastly more than the poor.

      The stability that comes with property rights and safe streets benefits the poor more than the rich, because they cannot buy protection from either the government or the gangs who fill the void created by the absence of effective government.

      Again, I ask you – is it better to be poor in the U.S., or in Haiti? Most people would agree the U.S. – I don’t see poor people in the U.S. fleeing to Haiti, while I see lots of poor Haitians coming to this country for a better life.

      And why is it better to be poor in the U.S.? Because we have an effective government at most levels of society (there are exceptions with certain municipalities), and it is paid for largely by middle-income and rich taxpayers, that is why.

      ClutchCarGo: And how is that protection working out for the poor? I don’t know about where you live, but around here it seems that the level of police protection is in direct proportion to the income level of the community.

      And who are committing those crimes? Do you believe that Paris Hilton and Donald Trump are visiting poor neighborhoods to mug the elderly and commit drive-by shootings?

      ClutchCarGo: And while the most immediate and visible victimization of the poor is committed by other poor people (those nearest to them), worse crimes are committed against the poor in terms of substandard education, degraded environment and infrastructure, and a denial of basic human needs like shelter and health care even for the working poor.

      Schools are substandard in certain areas because a large percentage of parents don’t care about education, and this is passed down to their children. The children don’t pay attention in class, don’t care about the facilities and make life miserable for their peers who do want to learn.

      It’s not because of a lack of money – the Washington, D.C., school district spends more per pupil than virtually any other district in the nation, but also has one of the poorest student acheivement rates. Here in Harrisburg, the Harrisburg School District is known for spending a lot of money compared to many rural and suburban districts. It does not have a higher rate of student achievement than those districts.

      A degraded environment? Who is repsonsible for that problem? Most environmental laws apply equally in all areas. If an area is degraded – meaning, physically rundown – it is because of a certain percentage of the people who live there don’t care about it.

      Here in Harrisburg we have a problem with trash being dumped in the streets or in vacant lots in certain poor neighborhoods. The mayor scheduled an intensive clean-up to deal with the problem. Within a week, trash was back in the streets and in the vacant lots. Do you believe that people from Camp Hill, Susquehanna Township or Derry Township – all wealthy areas – were driving into Harrisburg to dump trash and appliances in the street or in vacant lots?

      As for shelter and health care – we have Medicaid for the poor, and virtually every state has full health insurance coverage for children under the age of 18. Many of the working poor lack basic financial knowledge, and spend their money on the wrong things. You shouldn’t be spending money on the slammed ride with wheels from Rent ‘n Roll, or the lifted pickup with the gun rack, if you can’t afford the basics. Same for deluxe cable television packages or the latest cellphones.

      Plus, if you are poor, you cannot afford to have 2-3 children. In today’s society, children are an expense, as they are not able to be put to work immediately, as they were in agricultural or nomadic societies.

      Or are the rich now forcing the poor to bear unwanted children?

      ClutchCarGo: Who commits/perpetuates those crimes?

      See above. It’s not the rich.

      ClutchCarGo: Seriously? The people who made billions selling CDOs of sub-prime mortgages created real wealth? The people who made billions shorting those CDOs via credit default swaps created real wealth?

      If those people constituted most of the rich, you’d have a point. But they don’t. My suggestion to you is to read The Millionaire Next Door, which shows who is really rich (hint – it’s not necessarily the people who LOOK rich because of the clothes they wear, the cars they drive or where they live).

      ClutchCarGo: J. Allen Smugbutt III who inherited millions from J. Allen Smugbutt II created anything?

      Your perceptions are about 30 years out of date. Most of the rich did not inherit their money.

      Again, read The Millionaire Next Door.

      ClutchCarGo: The “peasant class” are nearly the only ones left in this country actually DOING something (and I count myself amongst that “peasant class”), and without US generating real output of some kind the CEOs and financiers of the world would have nothing to manage and/or exploit.

      Manufacturing is important, but the idea that you are not doing anything unless you produce a tangible product is out of date.

      ClutchCarGo: Yes, the capital and mgmt of the rich faciltates the “peasant class” to have some work to do, and they should reap rewards accordingly, but it’s absurd to say that their capital and/or mgmt alone is largely responsible for the creation of wealth.

      And how many jobs would the “peasant class” have without that capital necessary to form a company? And the workers are rewarded with something called wages. If they are unhappy with those wages, they are free to look elsewhere for work.

    • 0 avatar
      PeteMoran

      Is there an award for the most ignorant post of 2010?
       
      The United States of Inequality

  • avatar
    Crosley

    I consider what Ford did to be COMPLETELY different than the situation with GM and Chrysler.
     
    What Ford received was a short-term line of credit as a result of banks freezing because of a financial panic. This sort of commercial paper was frequently traded, but everything temporarily froze.  The line of credit was then paid back completely WITH INTEREST.
     
    GM and CHRYSLER were GIVEN (not loaned) tens of billions that will never be paid back, bond holders were completely shafted, and the US Government is now the largest shareholder of GM.
     
    If all the car companies simply got a short term line of credit in order to keep the lights on that they paid back with interest during a genuine once-in-a-hundred-years financial panic, NO ONE would be up in arms over it.

  • avatar

    Taking a loan from the Fed is pretty much meaningless in comparison to the GM BAILOUT that granted the U.S. Treasury a 60.8% stake in the company and screwed investors out of their stake all while giving a sweetheart deal to the unions and making GM a privately held company with Uncle Sugar being top dog in that deal. (whew- long ranty sentence) Oh did we mention GM being punked out and Obama replacing the CEO? Presidents can do that now ya know!
    GM should have gone into bankruptcy- period. That is what happens in capitalism, bad company with bad decisions fail. No one is “too big to fail” when failing means bankruptcy.

    Perspective folks, all about perspective.

    • 0 avatar
      LithMike

      GM did go into bankruptcy. All of the stockholders and the bondholders got screwed. The bondholders received a little stake in the new GM, but the old stockholders got nothing. I am sure a lot of these people will never buy a GM car again.

  • avatar
    Lorenzo

    Loans are not a bailout. GM and Chrysler went through bankruptcy and the government provided the working capital to continue operations while they restructured. That’s part of any chapter 11 process.
     
    Ford used a fed facility that was meant to temporarily replace the kind of corporate paper funding that’s part of normal industrial financing, and that would normally have been handled by banks. Since banks were in crisis and unable/unwilling to continue that corporate funding mechanism, the fed stepped in to maintain that vital component of industrial financing.
     
    You really can’t call that a bailout of Ford, since the facility was part of the bailout of the banks, keeping that portion of their business going, without damaging the industrial financing system, until banks could re-assume their pre-crisis role.

  • avatar
    Steven02

    To be completely fair, this was Ford’s credit arm so that they could continue loaning money for people to buy cars.  On top of this, several major auto manufactures took part in this plan including BMW and Toyota.  So if we are talking about a secret Ford bailout… we should also be talking about a secret bailout of BMW and Toyota.
     
    http://jalopnik.com/5704575/

    • 0 avatar
      SVX pearlie

      The difference being, BMW & Toyota didn’t get on the horn about being holier than thou.

    • 0 avatar
      Steven02

      My memory might not be to good on the subject, but did for really get on the soap box and say we did it without a bailout?  I know they said they didn’t want to take a bailout and there was some news about that, but I don’t recall them saying anything either in a press release or commercial that said we didn’t take a bailout.  If I am wrong, which could very well be the case, please provide a link to the press release or commercial that does make the case.

      What is also different is that this didn’t go to fund Ford’s operations, or Toyotas or BMWs for that matter, it was so that they could lend money. Ford Motor Credit borrows to lend money to consumers, as does Toyota and BMW with their financing arms. What I was saying is that this isn’t a bailout. This was so that these companies could continue loaning money because banks weren’t. But, if you put Ford in the bailout bucket for this, all of them deserve the same treatment. I don’t think that this qualifies as a bailout at all.

    • 0 avatar
      geeber

      I don’t recall Ford being “holier than thou” regarding its lack of need for a bailout. It simply said that it didn’t need any money for this, which was an honest answer to a valid question. As a matter of fact, I seem to recall that Ford publicly supported the bailout of GM and Chrysler. Contrast that to 1980, when GM initially opposed the federal loan guarantees for Chrysler.

    • 0 avatar
      Bancho

      @SVX perlie:
      Please provide a link to anything that shows Ford engaging in what you describe.

    • 0 avatar
      DubTee1480

      I don’t recall Ford officially releasing any “we didn’t take a bailout” statements or ads, but I do recall local radio commercials in which dealers claimed to be selling “bailout free” cars…. this may be where SVX pearlie is getting that impression.  And in my area, this wasn’t just Ford, I think a Toyota dealership joined in, though to be fair we have a local auto empire that probably accounts for half of all car sales in the metro area under the umbrella of half a dozen different automakers.

    • 0 avatar
      geeber

      Those ads are put out by dealers, who control the content and the message. They are not corporate ads developed and approved by Ford.

    • 0 avatar
      DubTee1480

      @ geeber
      Exactly!

    • 0 avatar
      Crabspirits

      No link, but I just saw a 60 Minutes episode on Ford where the chairman was being interviewed. Went something like this:

      Mike Wallace(?):”…and you didn’t take the bailout?”
      W.C. Ford Jr:”We did not take the bailout.” (Huge grin)

  • avatar
    Da Coyote

    One might ask former GM stock and bond holders whether they would be willing to retroactively trade their worthless GM investments for Ford paper back a couple of years ago.
    Methinks that sez it all.  As for me, GM will NEVER darken my door again.  EVER.

  • avatar
    akcaptruth

    I would like to reiterate that Justin Hyde at Jalopnik authored a story on these bailouts December 2nd.
     
    http://jalopnik.com/5704575/ford-bmw-toyota-took-secret-government-money

  • avatar

    Love how the naysayers continue to grasp at whatever straws they think they’ve found, to show Ford was just as hapless as Gov’t Motors and Fiasler in relying on government help. And — as has been repeatedly shown before — their arguments don’t hold up.

    When it comes to credibility, there would seem to be precious little difference between the likes of Fry and, oh, Simple_Silvy…

  • avatar
    dodobreeder

    Hey, if you’re against bail outs, hand outs and nationalization, just don’t buy their sh it.  Just say NO to Detroit.  Works for me.

    • 0 avatar
      psarhjinian

      So what about the Europeans, Hyundai/Kia or the Japanese, who are based in environments where government, labour and industry cooperate quite cosily?  What’s the alternative?  Caterham?
       
      Saying you’re against it without really giving a good reason why and/or understanding the scope of such cooperation is pretty simplistic.

    • 0 avatar
      dodobreeder

      I am against any kind of bail outs, hand outs and nationalization for anyone or anything.  The government should not decide who will live and who will die in business, especially if they are using my tax dollars.  The marketplace decides which businesses will live and which ones will die.  GM died.  Chrysler remained dead after Daimler.  Ford was barely breathing and was kept alive with clandestine bail out money.  I drove Ford all of my life, and still have a 2006 Mustang 4.6 GT, but I have switched brands for my truck and minivan.  Like so many others, I prefer the worst from Toyota over the best from Ford these days.  It IS pretty simplistic: you either support bail outs or you don’t.  I don’t.

  • avatar
    Hank

    It should also be noted that much of the angst over the GM deal was not just about loans, it was about a federal takeover and the fact GM was no longer a publicly traded entity, but a company majority owned by the US Treasury. That didn’t happen at Ford (or BMW, Toyota), and since this is hardly the first time this has been brought up, it was not really too secret, either.

  • avatar
    psarhjinian

    Fascinating.  The whole rest of the world manages to run industry and government in a more above-board and cooperative manner and does so mostly  successfully, but in America the years of anti-socialist rhetoric has forced that cooperation and formality into back rooms and shadow hand-outs.
     
    I can’t help but find it amusing how corporatist-driven ant-socialism is feeding the populism that will, mark my words, see many of those same corporations flung under a bus to suit some populists’ political whims.
     
    Personally, I don’t particularly care the “my tax dollars” went to GM and Chrysler (and Ford, and Toyota, and whomever).  “My tax dollars” go to a lot of things, many of which I don’t support, but are regrettably necessary for a functioning society and can’t be unwound without a lot of effort.  Do we really want to play that game?  Really?  Because I don’t particularly want my tax dollars funding a lot of things that your typical anti-bailout person probably does enjoy.

    • 0 avatar
      geeber

      No, they don’t. I hope no one is going to say that there is less corruption in France or Italy – or even Japan – than in the U.S. The only reason there appears to be less in those countries is because there is more tolerance of it, and thus it doesn’t make front-page news, like it does here. And let’s not even get into China and Russia.

      The reason there appears to be more cooperation in those countries is because there is a whole lot of back-scratching occurring, not to mention outright bribes and cozy relationships that would have both the left and the right in a tizzy if they were happening here.

  • avatar
    Dave M.

    Apples and oranges, Mr. Fry.  Also, old news.

    As has been stated numerous times, Ford didn’t need the money to keep their doors open, get out from under their burdensome obligations, or to shed half their divisions.

  • avatar
    philadlj

    Had the “bailout backlash” been spread out equally across the three Detroit automakers, part of me feels like it would all cancel out. After all, would libertarians really buy imported cars (or cars from import automakers made here) just to spite the Detroit 3 and the government? In other words, where does the resentment of government intervention end and patriotism/protectionism begin?

    • 0 avatar
      Educator(of teachers)Dan

      Depends on the particular bent of their libertarianism.  I personally lean toward some of the theories of Adam Smith in an economic realm.  His belief was if a country can’t do something as well as competing countries (like produce cars) it should stop doing that and find something that it can do with maximum production efficiency and quality.  Of course by his logic the Koreans should be the only one’s building cars right now until the Chinese automakers catch up.

  • avatar
    mtr2car1

    Steven02 is right – when did Ford ever come out and say they did or did not take a bailout??
    If surveys of customers show they feel they didn’t vs. the other 2 and the Media is either too dumb or lazy to point out that while technically true – it doesn’t mean they didn’t take advantage of government opportunities – what problem is it of theirs?
    As a shareholder, I expect them to take advantage of these opportunities – I look at it as payback for the government washing GM and Chrylsers books and proping them up at the expense of the stronger players – Ford and others included.
     

  • avatar
    VanillaDude

    What Ford did is not the same as what GM did.

    GM is in such a hole, they couldn’t even pull off what Ford did, and we see that they tried but failed.

    GM sucks – Ford still wins this one.

    Ford has better management and this proves it.

  • avatar
    ComfortablyNumb

    Are you just trying to get your hit count up, Bertel?  This headline is misleading at best.  Why does TTAC insist that Ford’s tapping into resources available to any other qualified company constitutes a bailout?  TTAC called out the US Gov’t for a witch hunt against Toyota but fails to acknowledge that they’re doing the same thing to Ford.

  • avatar
    gessvt

    Bertel, take a look at this article: http://www.msnbc.msn.com/id/40764095/ns/business-us_business/
    It does not say “TD Bank to buy Chrysler for $6.3B”, it says “TD Bank to buy Chrysler Financial for $6.3B”.  Big difference.
    With this in mind, also remember that Ford Motor Company and Ford Motor Credit are two different companies.  Different employees, different buildings, different ledgers.

  • avatar
    AaronH

    The weak and stupid public school brats do not even realize that the entire monetary system is just a counterfeit racket…The government deliberately keeps citizens stupid and weak with their public schools and TV broadcasts so they can’t figure out that they are slaves. The Federal Reserve printed up and handed out at least 3 trillion dollars and most of that there is no paper trail for. Of course Ford took free money from their Masters (at LEAST 7 billion dollars and probably much more…Maybe Ron Paul can get an audit of the Fed…I doubt the Reid and Obama Parasites will allow it though) at everyone elses expense…Only an absolute moron could think otherwise. Amerikans live in a Fascist society yet, thanks to their Prussian public schooling, most of them think that they are “Free”…It really is freakishly disgusting…Like a George Orwell story.

    • 0 avatar
      Mr. Sparky

      Nope… I’m perfectly aware that our money is not backed by anything but the promises of the government…  Which is pretty much like every other currency on the planet…  Which in a republic is pretty much a promise to ourselves.

      Currency has pretty much always been a “book keeping” trick since the advent of paper money to make monetizing transactions much easier.  As a software developer, I far prefer having the bank give “money” to say my mortgage lender than working out how many lines of code I need to barter with them.

      Next your going to tell me how the socialists have brained washed me into the lie of reserve banking!  Oh silly rabbit…  Gold Standards are for the failed economies of the Great Depression!

  • avatar
    Dave M.

    This headline is misleading at best. 

    I wholeheartedly agree.  Cheap shot, Bertel, and beneath your standard and rep.  Tsk tsk.

  • avatar
    ozibuns

    Bertel I think you need to take a bullet for this one.

  • avatar
    gslippy

    Where’s Robert Farago?  He was singing this tune some time ago, and took lots of abuse for it.

  • avatar
    Robert.Walter

    Ford publically endorsed the support of GM and Chrysler because if these companies had stopped buying parts, Ford would have been dragged down as well.

    In addition. Ford leveraged the opportunity to lobby for a government line of credit (I never did see that this was ever provided, however,) but just the possibility of this being had to be cause for comfort for Ford’s creditors.

  • avatar
    Mr. Sparky

    Ford participated in a well known government lending facility that many Fortune 500 used when the short-term credit markets froze.  Way to break open that story!

    What’s next…  Ford is in the government’s hands since it takes business deductions on it taxes….  Oh, I know….  The government bailed Ford out in the 2000s by inventing the Hybrid tax credit…  I believe those are about as logical as the claim in this story.

  • avatar

    At this site, I’ve read:
    (1) Ford is in a terrible position because it has a huge debt load that GM/Chrysler don’t, since they were bailed out.  AND . . .
    (2) Ford got a bailout just like GM/Chrysler.
    It can’t really be both, can it?  Y’all might want to pick one story and stick to it.

  • avatar
    PeteMoran

    Is it paid back? Yes. Great, thanks for popping in.

  • avatar
    clearance42

    Tried to send this to TTAC via the contact link, but the validation appeared to be failing (submitted under Editorial Suggestions):
     

    Every blog, newspaper, magazine, etc has their own perspective and voice, and that is perfectly fair and acceptable, however for Bertel Schmitt to represent Ford’s use of the commercial paper facility as a federal bailout strikes me as beyond the pale.  I know Bertel’s history in the industry, and it seems very unlikely he does not know that the facility is used by all of corporate America, which makes this article at worst incredibly disingenuous.  At best, Mr. Schmitt was NOT aware of the general usage of this facility and that simply makes this article poorly researched. The article that this article is based on is equally shameful.
     
    And now for my editorial suggestion: Don’t believe everything you read on the internet.

  • avatar
    Z71_Silvy

    I have been saying Ford has taken Government money for years (and yes…money from the DOE is taxpayer dollars).
     
    Not to mention that Ford benefited from that horrible piece of government assistance known as C4C.
     
    I just wish Ford would produce something of quality with our money like GM and Chrysler did….not the same garbage as they have been for the past 15 years…

  • avatar
    etymologue

    Let’s simplify it for those here who don’t seem to understand the difference.

    First: need. GM and Chrysler failed in the marketplace and would have ceased to exist if they had not been completely taken over by the government. Ford took steps to prepare for the recession and recovery on its own, and in the meantime took advantage of a widely-available (if not widely-known) governement program on the same terms as many, many other companies. Equating the two is like saying claiming deductions for charitable contributions on your taxes is the same as receiving welfare, because both are government benefits.

    Second: scope. GM, Chrysler, and their finance companies received over $100 billion on very loose terms, much of which will never be recouped, stiffed bondholders and shareholders out of a hundred billion more, and was given a highly irregular tax holiday as a bonus. Ford got $7B in short-term loans (again on the same terms as many other companies), all of which has since been repaid. GM also got subsidized funding in the form of loan guarantees to GMAC/Ally Bank, even as they operatied in a highly speculative and market-disrupting manner, while the Feds have refused to allow Ford to establish a bank to compete on equal footing. This has cost Ford billions more, but I never see it discussed when the topic of GM subsidies comes up.

    Third: special treatment. GM and Chrysler are among only five or six companies that were so far gone that they had to be nationalized – and two of those were only nominally private to begin with. Few Americans would agree that either was worth saving; it was simply UAW payback by a president who had himself been handsomely paid by the UAW. To this day, the UAW continues to give GM and Chrysler (of which they are now part-owners) better contract terms than Ford – still more assistance to these failed and failing companies.

    Don’t get me wrong, I don’t fault either GM or Ford for taking advantage of everything they can, but it’s useful to remember what would have happened if neither had gotten government subsidies: GM and Chrysler would be dead, the UAW would be decimated, Ford would would be doing even better than they are today, and the world (outside of Michigan, anyway) would be a better place.


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