Bailout Watch 69: Collateral Damage

Robert Farago
by Robert Farago
bailout watch 69 collateral damage

We’ve asked this question before: what collateral can The Big 2.8 provide to secure their share of the $25b worth of federal low-interest loans offered by the Department of Energy? I mean, Uncle Sam IS going to ask for some sort of guarantee that your tax money won’t disappear down a rat hole, RIGHT? If so, what’s on the table? Ford has already mortgaged the company up to and including its logo. Aside from the Jeep brand, what’s Chrysler got that anyone wants? Minivan production for VW? As for GM, we now learn what The General had to sign over to draw-down the remaining $3.4b of its $4.5b credit facility with Citicorp and JPMorgan Chase. reveals the list. “The collateral for the credit consists of North American accounts receivable and inventory of GM, Saturn Corp., and General Motors of Canada; plants, property, and equipment of General Motors of Canada; and 65 percent of the stock of the indirect subsidiary General Motors de Mexico.” Talk about a precedent… if GM continues mortgaging its foreign ops, a C11 will take down the whole schmeer.

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  • Rix Rix on Sep 27, 2008

    If you are willing to take a moonshot you can get 20.1% on Ford Subordinated debt right now. I'm thinking of buying a tiny bit. It's kind of like the ultimate option (financial, not automotively speaking). 20% for life if the company makes it (or they can buy you out for face value- 250% of what it costs now) and worthless if Ford goes under.

  • Golden2husky Golden2husky on Sep 28, 2008

    Blucon: I actually watched your political commercial - all of it. Nice presentation, really. Why the Democrats don't put together things this well is surprising. However, I could get carpal tunnel typing up rebuttals, but really if you want to be more believable, you know "fair and balanced," why is every bit of information posted showing that Democrats did every bit of the dirty work? They share their blame, no doubt. But to totally disregard the vast Republican influence on this debacle shows the clear political intent. I see you like Google. Me too. Give "John McCain savings and loan" a shot. Forgot that, huh? Irony is a bitch, indeed. Also, take out all those loans "handed out" to those pesky minorities and you still have way too many others getting loans that they can't afford. Here's a taste of Mr. McCain's involvement. This came after he dumped his first wife (the married woman he had an affair with, who he subsequently married and, when she became disabled, dumped her) but between the runs to the craps tables. I love a man who stands for Family Values!! From Google: Charles Keating was convicted of racketeering and fraud in both state and federal court after his Lincoln Savings & Loan collapsed, costing the taxpayers $3.4 billion. His convictions were overturned on technicalities; for example, the federal conviction was overturned because jurors had heard about his state conviction, and his state charges because Judge Lance Ito (yes, that judge) screwed up jury instructions. Neither court cleared him, and he faces new trials in both courts.) Though he was not convicted of anything, McCain intervened on behalf of Charles Keating after Keating gave McCain at least $112,00 in contributions. In the mid-1980s, McCain made at least 9 trips on Keating's airplanes, and 3 of those were to Keating's luxurious retreat in the Bahamas. McCain's wife and father-in-law also were the largest investors (at $350,000) in a Keating shopping center; the Phoenix New Times called it a "sweetheart deal." Yep, COUNTRY FIRST!!

  • Geeber Geeber on Sep 29, 2008

    The savings and loan debacle is I'm not quite sure of its relevance to this particular problem. Senator Obama's only advantage is that he hasn't been around that long...although given his dealings with Tony Rezko, it appears as though he is well on his way to an illustrious career typical of politicians who come up through the Chicago machine. golden2husky: However, I could get carpal tunnel typing up rebuttals, but really if you want to be more believable, you know “fair and balanced,” why is every bit of information posted showing that Democrats did every bit of the dirty work? And I could ask why the supposedly balanced, mainstream media acts as though this all started on January 21, 2001, and conveniently forgets the seeds that were planted when the Clinton Administration began placing pressure on financial institutions to bend lending standards that were deemed "racist" or face censure - or worse - from federal regulators?

  • Golden2husky Golden2husky on Sep 29, 2008

    geeber: The S&L issue is only relevant in that John McCain was involved and his behavior runs counter to what platform he is running on. This makes me question his integrity. As for all this starting during Bush's first term, of course it did not. "W" has plenty of things he can accept full responsibility on; this is not one of them, nor did I imply that it did. I really don't get the impression from the media that they are only blaming Bush for all of this, either. The original poster that I questioned made it clear that it was a total Democrat induced problem. Most illogical. You are correct that most media outlets don't bring up the issue to approve loans for "minority" homeowners with marginal abilities to pay, but how many of these loans were made, percentage wise, relative to all of the questionable loans? There was just too much money to be made and corporate America just can't turn down short term gain, even if the long term repercussions are severe. Lastly, I am no fan of Senator Obama. He is, in my opinion, just the lesser of the evils. I would, however, gladly have traded Bush for McCain. Or HW Bush for that manner.