While there is renewed chatter about a renewed GM bankruptcy, ratings agency Fitch thinks otherwise. The agency that assesses the chances of defaults by companies and countries raised GM’s default rating from BB to BB+, which is once notch below investment grade. Read More >
Category: Bailout Watch
Bailed-out GM might sink $2 to $4 billion into likewise bailed-out Ally Financial to buy some of the lender’s international operations. Ally “ironically wants to use the proceeds to help repay its own federal bailout aid,” says Reuters. That plan does not sit too well with some observers. Says the wire: “Analysts and investors disagree on whether that would be the best use of cash, with some preferring a stock buyback or dividend payment.” Read More >
The Daily Caller says it has emails that prove that the pensions of 20,000 salaried retirees at Delphi were terminated “solely because those retirees were not members of labor unions.”
The emails, says the conservative website “contradict sworn testimony, in federal court and before Congress, given by several Obama administration figures. They also indicate that the administration misled lawmakers and the courts about the sequence of events surrounding the termination of those non-union pensions, and that administration figures violated federal law.” Read More >
After GM’s IPO, stockholders looked with great anxiety at the 32 percent the U.S. government still holds in General Motors. Allegedly, the U.S. government wanted to shed that share as quickly as possible, and someone dumping the stock does not make for rising stock prices. Now, GM is sending out smoke signals that a sale is far from imminent. GM’s chief spokesman Selim Bingol wrote in a blog that “the day will eventually come when the Treasury sells its GM stake. When is anybody’s guess (we have no say in the matter).” Read More >
One of the great mysteries to many inside the auto industry is why is GM’s stock price so low? Though the company had a weak third quarter, its stock price has been stuck well below its IPO price for much of the last year, despite a return to profitability. Though GM faces challenges, few inside the auto industry understand why its stock price remains so low. One theory: the government’s mere continued presence as a major stockholder creates uncertainty around the company. If this is the case, it creates something of a vicious cycle: the lower the stock price, the less likely the government is to sell its shares, leaving it lingering with no exit strategy, in turn driving the stock lower. Though that’s not likely to be the whole story, one thing is certain: the government has been forced to increase its loss estimate for the GM bailout. The Detroit News reports that the Treasury’s losses on GM are now estimated at $23.6b, up from $14.4b. And with an election looming, it seems likely that the White House will sell within the next six months. But will the government’s desire to protect itself politically trade off with GM’s PR? After all, whatever the Treasury’s final loss is, that number will be pinned to GM as a symbol of what it owes the American people. On the other hand, with most analysts insisting that GM stock is undervalued, another year of government ownership could convince investors to bid up the price, greatly reducing GM’s public debt. Too bad electoral politics will probably prevent that from happening….
Whether or not the White House pressured or even contacted Ford Motor Company after the company released their recent ad appealing to anti-bailout sentiments we’ll probably never know. We’ll also probably never know if this was all just a symphony of leaks and disclaimers orchestrated by Ford. What we do know, thanks to a Rasmussen opinion poll [Sub. required, some data here], is that Ford had good reason to stoke American consumers’ resentment against it’s domestic competitors because they were bailed out by the government. The poll shows that the bailout is clearly a factor, sometimes an overriding one, in automobile purchase decisions. Not only did nearly one in five recent Ford buyers say that they or family members specifically chose Ford products because they didn’t take a government bailout, about half of all consumers surveyed said that they were more likely to buy Fords than GM or Chrysler products specifically because Ford didn’t get bailed out. [Note: Yes, Ford took Dept. of Energy loans and other government funds, but this survey was looking at people's opinions, not facts.]
In a report released earlier this week [PDF], the EPA Inspector General criticized the Technical Support Document for the portion of greenhouse gas regulation dealing with “Endangerment,” or the possible effects of greenhouse gasses. Inspector General Arthur A. Elkins Jr. summed up his office’s findings [PDF], writing
The OIG evaluated EPA’s compliance with established policy and procedures in the development of the endangerment finding, including processes for ensuring information quality. We concluded that the technical support document that accompanied EPA’s endangerment finding is a highly influential scientific assessment and thus required a more rigorous EPA peer review than occurred. EPA did not certify whether it complied with OMB’s or its own peer review policies in either the proposed or final endangerment findings as required. While it may be debatable what impact, if any, this had on EPA’s finding, it is clear that EPA did not follow all required steps for a highly influential scientific assessment. We also noted that documentation of events and analyses could be improved.
Oy vey. Greenhouse gas science controversy. So, what’s the problem really about?
The Detroit News reports that the only Republican in Washington with subpoena power, Rep Darrel Issa has written a letter asking Ford CEO Alan Mulally for “a full and complete explanation of Ford’s decision” to stop running an advertisement that was critical of the TARP-funded auto bailout.
In a letter, Issa asks Ford if any White House, Treasury or other federal employee discussed the ad with any Ford employee “at any time via any manner of communication” and asks the automaker to turn over any documents connected to any discussion by Oct. 12.
Spokeswoman Meghan Keck said Ford will cooperate, but reiterated that the White House didn’t pressure the Dearborn automaker.
Ford took the ad off of Youtube after “individuals inside the White House questioned whether the copy was publicly denigrating the controversial bailout policy CEO Alan Mulally repeatedly supported in the dark days of late 2008,” according to Daniel Howes of the Detroit News. The same day Ford restored the video, and denied that White House pressure led to the takedown. Color us curious as to how Mulally is going to explain this little episode…
UPDATE: The Washington Post’s Plum Line reports
I just got off the phone with Detroit News managing editor Don Nauss. “We stand by our column,” he told me. “It was based on multiple sources. It’s written by a busines columnist who can draw conclusions based on the reporting that they do.”
The story contains no attribution for the central charge of White House calls to Ford. Asked about this, Nauss declined to comment.
Asked to clarify if the column was alleging any White House pressure on Ford (the story hints at it up top but quotes someone later saying there was no pressure), Nauss declined to say. “The story speaks for itself,” he said.
When contacted about his column, Howes referred me to Nauss’s comments above.
As I noted in the comments of this morning’s piece on the Ford Bailout ad controversy, if the White House did contact Ford about the ad and the company did take down the video in response to the pressure, it certainly wouldn’t admit as much. After all, the whole point of caving to White House pressure would be to defuse, not inflame, a political standoff. And sure enough, one hour ago, Ford reposted the video (currently with around 300 views) and shared it on its Facebook account. Ford says the ad “ran as part of a planned rotation and continues to run online,” predictably avoiding any reference to reports of White House concern. And though the low view count proves that Ford took down, then reposted the video, a Youtube message to the uploader of what earlier today was the only remaining version on Youtube reveals that mainstream media news reporters were unable to find other copies of the ad.
The White House has not yet commented on the situation, but hit the jump for more details on Ford’s curious response…
[UPDATE: Ford has restored the video to Youtube. More details here.]
Detroit News columnist Daniel Howes reports in a column that Ford has pulled its controversial “bailout ad” after the White House asked “questions” about it. And apparently the take-down decision makes this a threatened piece of footage: in addition to yanking the spot from the airwaves, the version of the video we posted two weeks ago has been taken down from YOutube as well [a home recording of it can still be found here]. So what happened that Ford would throw its most popular ad in ages down the memory hole? Howes is cryptic…
Ford pulled the ad after individuals inside the White House questioned whether the copy was publicly denigrating the controversial bailout policy CEO Alan Mulally repeatedly supported in the dark days of late 2008, in early ’09 and again when the ad flap arose…
With President Barack Obama tuning his re-election campaign amid dismal economic conditions and simmering antipathy toward his stimulus spending and associated bailouts, the Ford ad carried the makings of a political liability when Team Obama can least afford yet another one. Can’t have that.
Read More >
At the height of “bailout fever,” after TARP had been instituted but before the automakers had been completely bailed out, one argument that we heard a lot of from Detroit’s defenders was “how can you begrudge the manufacturing base a few billion when speculators at the banks are receiving far more support?” At the time, the argument seemed to me like a convenient way to shift attention away from Detroit’s failures and undercut the argument that consumers, not a credit crunch, were responsible for killing off GM and Chrysler… but at least then it still had some validity. Fast forward to today, and history has stripped it of all relevance, as it turns out the banks will likely be picking up the automakers’ bailout tab.
“Chris” from Ford’s “Press Conference” commercial, which has received extensive media play recently from TTAC to Fox News, has uploaded a Youtube video in order to give his own, non-Ford-approved perspective on the controversy. He claims to be “just a guy who loves his F-150,” and insists that the commercial wasn’t staged or intended to be about the bailout. And based on his spontaneous thoughts in this video, the ideological component of his views do seem genuine. But don’t take my word for it, watch for yourself.
Wow. I don’t know if Ford is broadcasting this particular commercial [Ed: They are, although possibly not in the Detroit area], but it’s part of a series of ads that Fred Goss directed for Company Productions. The ads were set up by recruiting recent Ford buyers to come in and answer some market research questions. Those Ford owners did not know that they would be walking into a press conference with, apparently, real journalists [Ed: Huh?] asking them about their purchase. Company Productions released a video on the making of the ads. In this particular case Ford got lucky when a F-150 owner named Chris sat behind the microphone. Answering a reporter’s question, “Was buying American important to you?” Chris came up with something that advertising copy writers dream of writing.
Read More >
Republican leaders in the House of Representatives want to halve the balance of a U.S. government loan fund established to help the auto industry make more fuel efficient cars and trucks.
If plans to shift some $1.5 billion from the Energy Department advanced technology fund to disaster assistance are carried out, serious questions would be raised about Chrysler’s ability to fully capitalize on its bid for new financing.
That the DOE loan program is under attack comes as no surprise: it’s been savaged by both the GAO (twice) and the Center for Public Integrity for a lack of clear goals, weak oversight, misappropriation, and political patronage (more on the patronage bit here). And with the Solyndra DOE loan scandal blossoming, it’s no surprise to see ATVM going under the axe (although Rep Steny Hoyer is leading the Democrat pushback). What’s worrying about this development, however, is that Fiat-Chrysler CEO Sergio Marchionne has said that the DOE loan was “a crucial part” of negotiations over its recent Wall Street bailout loan refinancing. When GM quit the program earlier this year, Marchionne also said that
I have neither the arrogance nor the cash to show any disdain toward the DOE process.
Chrysler also cites its ability to secure the DOE loans as a major risk factor in its latest 10-Q SEC filing. And with only about $10.2b in cash and equivalents on hand at the end of June, there’s a chance that this attack on the ATVM loan program could deal a body blow to Chrysler’s finances. Here’s hoping Sergio has kept the runt of the bailed-out automaker litter from dependence on this apparently corrupt, and politically vulnerable loan program.