Tag: Bailout

By on January 19, 2021

Stellantis

Stellantis, the merger between Peugeot and Fiat Chrysler Automobiles, became effective on Saturday, January 16th. The world’s fourth-largest carmaker has emerged, a surprise to no one.

(Read More…)

By on December 7, 2020

When the United States announced it would be offering payroll relief to the countless small businesses it impacted with government shutdowns intended to combat COVID-19 earlier this year, everyone breathed a sigh of relief into their mask. Unfortunately, the Paycheck Protection Program (PPP) became a confusing bureaucratic mess almost instantly. It wasn’t clear how companies would account for part-time or contracted employees, numerous banks denied help to those with less than stellar financial histories, and the application website repeatedly crashed — which was awful for a service that was designed to accommodate candidates on a first-come-first-serve basis.

There were also numerous provisions that allowed big business to take advantage if their individual locations were small enough and loopholes for companies that weren’t even required to shut down operations. Criticisms understandably began to surface, followed by months of commercials asking concerned citizens to report instances of fraud. One such example came into focus this week after a former sales representative for a Pennsylvania-based dealership group launched a federal lawsuit against their ex-employer alleging that it had violated the False Claims Act in relation to PPP.

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By on April 28, 2020

With enhanced scrutiny and plenty of differing opinions being heaped upon the government loans issued to help soften the economic impact of the coronavirus pandemic, the Small Business Administration (SBA) has signaled plans to conduct comprehensive investigations before offering any loan forgiveness. Under normal circumstances, one would expect that to be the typical course of action for all loans. But the scope of the Paycheck Protection Program (PPP) has complicated things.

Designed to provide a direct incentive for small businesses to keep workers on the payroll, the program earned heaps of criticism after millions of dollars were allocated to groups that didn’t exactly constitute small businesses. While the list is long, standouts include the Los Angles Lakers and Ruth’s Hospitality Group. We’re more interested in the United States’ largest new-vehicle retailers, AutoNation and Penske Automotive — both of which received millions via the SBA’s Paycheck Protection Program.  (Read More…)

By on April 26, 2018

The Buick Encore isn’t going away anytime soon. Built by GM Korea, the little crossover, its Chevrolet Trax twin, and the diminutive Chevy Spark will continue chugging out of the country’s three GM assembly plants and making a boat ride to the U.S., all thanks to a multi-billion dollar turnaround deal.

Faced with declining domestic sales and reduced exports, GM’s Korean division appeared on the edge of bankruptcy last week. A warring union resistant to the division’s wage and bonus demands and a hesitant South Korean government didn’t help matters. On Monday, however, the union representing 26,000 workers agreed to the automaker’s wage and bonus concessions. Members approved the deal today.

With GM’s end of the bargain — free up $600 million in operating funds — now complete, the taps can start flowing. There’s now $4.35 billion earmarked to turn the troubled automaker around. (Read More…)

By on July 7, 2015

 

Automakers PSA (Peugeot and Citröen) and Fiat Chrysler Automobiles are most at risk if Greece’s economy fails and the country backs out of the Euro, according to a report by Automotive News.

Analysts say the two automakers have the largest share of southern European markets — including Italy, Spain and Portugal — where the economic impact of a Greek failure could hit the hardest.

Although the automakers have a large share of those markets, its a relatively small portion of their overall sales, the report states.

(Read More…)

By on August 6, 2014

Delphi-Logo

From Bloomberg’s Zachary Mider comes a new allegation regarding the restructuring of (formerly) American parts maker Delphi: the Treasury Department under Obama helped the company re-incorporate in England as part of a tax avoidance strategy. If that’s true, it’s an embarrassing revelation for a President who recently condemned American companies that incorporate abroad as “corporate deserters.” Like many things in the financial world, however, appearances are often deceiving.

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By on May 23, 2014

Department of the Treasury

Back in 2004, perfectionist homemaker and well known TV personality Martha Stewart was charged with insider trading. As presented, the facts in the case were simple. Martha owned stock in a medical research company called ImClone and, like a lot of people who invest in tech firms, she was hoping for a big payout when their product, a promising new cancer treatment, went on the market. Unfortunately, the FDA chose not to approve the drug and the value of the stock looked set to take a beating once the decision was announced. According to the charges initially brought against her, Martha and many of the company’s top executives learned of the FDA’s decision though their inside connections the day before it was publicly announced and were able to sell their shares before they crashed. That’s against the law and many of the people caught up in the scandal, including Martha who was convicted on the charge of making false claims to a federal investigator, ended up going to jail. (Read More…)

By on October 30, 2013

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The Government Accountability Office issued a report on the U.S. Treasury’s investment in General Motors (and Ally Financial, the former GMAC credit arm of GM) which says that the automaker has improved since 2008 but that there still are concerns about competitiveness and market share as well as pension and labor costs. “Although GM’s financial performance has improved significantly since the company initially received federal assistance, questions remain about competitiveness, market share and costs,” the GAO said. (Read More…)

By on October 29, 2013

RenCen

With the vast majority of the government’s General Motors shares sold, the U.S. government is reporting a $9.7 billion loss, according to a Congressional report cited by the Detroit News.

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By on September 19, 2013

GM-building-US-Flag

The United States Treasury has reduced its stake in General Motors to 7.3% after selling off  another block of the shares it acquired during the bailout of the giant automaker. According to documents released earlier this week cited by Reuters, the Treasury sold at least 110 million shares between May 6 and September 13, raising more than $3.82 billion.

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By on August 13, 2013

ten_dollar_bill_American_back

Continuing its divestment of the shares it obtained in General Motors for bailing out the automaker in 2009, the United States Treasury told Congress yesterday that it has sold $876.9 million dollars worth of GM stock last month, somewhere between 23 and 26 million shares, based on the trading prices during July. By those calculations, the U.S. government still holds about 136 million shares of GM, which closed yesterday at $35.98. At the rate that Treasury is selling off its GM shares, the government’s equity will be completely divested by early 2014. The government originally held a 61% stake in GM following the $49.5 billion bailout, over 500 million shares. By selling some of those shares, Treasury has recouped $34.6 billion of the $49.5 billion. (Read More…)

By on August 2, 2013

GM Oshawa Plant Closure

Bloomberg and Sky News have reported that the Canadian government has started a selection process to find investment banks for selling off of the stake the government took in General Motors as part of its own contribution to bailing out the automaker. Late last year, Finance Minister Jim Flaherty said that Canada had no intention of holding those shares long-term. Together the federal Canadian and provincial Ontario governments own 140 million shares of common GM stock, valued at $5.1 billion (US), a 10% stake in the automaker, which makes Canada the company’s third biggest shareholder behind the U.S. Treasury and the UAW’s VEBA health plan. The governments had originally invested $9.5 billion in GM back in 2009, selling off 35 million of its shares when GM made its initial public offering of stock in the reorganized company.

(Read More…)

By on July 18, 2013

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Ally Financial, what used to be known as the General Motors Acceptance Corporation, GMAC, before GM’s bankruptcy and bailout, itself received over $17 billion from the U.S. Treasury during the bailouts of 2009. On Tuesday the company said that it was looking into options on how to repay that money and comply with the Federal Reserves’ latest stress tests for financial institutions. Ally is 74% owned by Treasury and it is trying to buy back some taxpayer-owned stock and reach an agreement with the Fed on its capital structure (known as the “Comprehensive Capital Analysis and Review”) so it can offer stock in an IPO. Ally had originally planned on a 2011 IPO but having to resolve claims against its bankrupt Residential Capital mortgage unit delayed that. ResCap hopes to be out of bankruptcy by 2014. (Read More…)

By on June 5, 2013

Now that the GM share finally is trading a wee bit above its IPO price, The Treasury is eager to bail from the bailout. The government’s  fiance department announced “plans to sell 30 million shares of General Motors Co common stock as part of its ongoing effort to wind down the government’s stake in the bailed-out automaker,” Reuters says. (Read More…)

By on May 15, 2013

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In America,  government bailouts of ailing car companies are (at least in some circles) viewed as an inalienable right. In the EU, government aid generally is forbidden by law. Ironically, Ford, the only un-bailed-out Detroit company, now is in collision with these quaint continental regulations. (Read More…)

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