Blue Ops: The Clandestine Bailout Of Ford
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.
“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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- David S. For a single quarter, only ninth best-selling (estimated?) of 2022. Maybe ICE vehicles would sell at a similar rate if the government paid people to buy them too?!
- Dukeisduke I don't like how they've changed their nameplates and font from the Star Trek-ish LEXUS, to L E X U S, kinda like VW's lettering on the back of the T A O S, or those stick-on letters you can buy at the parts store that people use to their own names on the back of their cars.
- Dukeisduke So, the screen goes blank for two-tenths of a second, every once in a while - what could go wrong?
- Dukeisduke "Hello, IT. Have you tried turning it off and on again?"(Roy in The IT Crowd)
- Dukeisduke Just Say No To Bugs!
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...
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.