Bailout Watch 314: GM Gets $4b, Refuses to Name Supplier Payment; Treasury Announces "Automotive Industry Financing Program"

Robert Farago
by Robert Farago

Uncle Sugar has completed the transfer of the first $4b of a $13.4b loan to General Motors, under the Troubled Asset Relief Program (TARP). Despite CEO Rick Wagoner’s previous pronouncement that his employer had enough cash to last through 2009, the artist once known as the world’s largest automaker (and the world’s most profitable corporation) was in danger of running out of money. And now it isn’t. Until later. Meanwhile, you might think that a $13.4b “investment” in GM would buy the U.S. taxpayer a little something called “transparency.” As The LA Times reports, you’d think wrong. “The cash-strapped Detroit company plans to use the money for continuing its operations… GM is obligated to make a large payment to a major supplier in early January; it has declined to offer details on the amount it owes or to which supplier.” And there are more strange doings over at Chrysler. (The automaker’s owned by Cerberus Capital, a private equity firm with close ties to the federal government, increasingly famous for bending rules to its advantage while operating under the cover of darkness.) “Auburn Hills, Mich.-based Chrysler is expecting $4 billion in cash as well, but the Treasury has yet to announce the closing of the first round of loan money. ‘We’re working expeditiously with Chrysler to finalize that transaction and we remain committed to closing it on a timeline that will meet near-term funding needs,’ [Treasury spokeswoman Brooklyn] McLaughlin said. Isn’t it wonderful how responsive our federal government is to the public’s– I mean, private industry’s needs? But wait! There’s more! Lots more!

“Before the deal was signed, the Treasury set out guidelines for what it called the Automotive Industry Financing Program,” the much-relieved Detroit Free Press reports. “which will offer aid to companies similar to the $6 billion injected into GMAC on Monday under the $700-billion financial industry bailout.”

More specifically [via Reuters] a payout depends on “whether a major disruption of the institution’s operations would likely have a materially adverse effect on employment and thereby produce negative spillover effects on overall economic performance.”

So let’s call it the gastric bypass rule: unless you’re REALLY big, you don’t qualify. So I guess it really is about jobs, jobs, jobs. Isn’t it? Despite the fact that small business is the backbone of the U.S. economy.

Robert Farago
Robert Farago

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  • Luther Luther on Jan 01, 2009

    A true "Uncle Sugar" would not steal half our earnings from us...Maybe call it "Uncle Tapeworm".

  • Ronnie Schreiber Ronnie Schreiber on Jan 02, 2009

    So now that GM has accepted loans from the feds they don't have any right to keep some business information proprietary? You guys want it both ways. You want to complain that gov't assistance to a business is tantamount to socialism, but when that business continues to operate the way businesses do (like not give their competitors inside information) you complain about transparency. What's next? You gonna insist that GM let every taxpayer (and Toyota) search out every nook, cranny and hard drive at the Tech Center?

  • TheMrFreeze That new Ferrari looks nice but other than that, nothing.And VW having to put an air-cooled Beetle in its display to try and make the ID.Buzz look cool makes this classic VW owner sad 😢
  • Wolfwagen Is it me or have auto shows just turned to meh? To me, there isn't much excitement anymore. it's like we have hit a second malaise era. Every new vehicle is some cookie-cutter CUV. No cutting-edge designs. No talk of any great powertrains, or technological achievements. It's sort of expected with the push to EVs but there is no news on that front either. No new battery tech, no new charging tech. Nothing.
  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
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