Bailing out the Detroit automakers

[scott91575]

Originally Posted by jimotis4heisman

just updated a few.

Late reply, but Mercury is Ford. Dodge is also not gone, it's Chrysler (unless you consider Chrysler gone).

[DaytonBuck]

U.S. taxpayers are unlikely to recover their $81 billion investment in General Motors Co. and Chrysler Group LLC and were ?left in the dark? on specifics of a decision to aid automakers, a congressional panel said.


The U.S. Treasury Department should consider placing its GM and Chrysler ownership stakes into an independent trust to prevent ?political pressure and government interference,? the Congressional Oversight Panel said in a report yesterday.


?Even if no direct conflict exists, a trust could prevent the use or appearance of political influence in the government?s ownership,? the panel concluded.

Toledo Free Press

[muffler dragon]

Nothing like buoying a (suspected or realized) failure.

[jimotis4heisman]

GMAC Asks for Fresh Lifeline - WSJ.com

In a stark reminder of how some battered financial firms remain dependent on government lifelines, GMAC Financial Services Inc. and the Treasury Department are in advanced talks to prop up the lender with its third helping of taxpayer money, people familiar with the matter said.
The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government's 35.4% stake in the company could increase if existing shares eventually are converted into common equity.
The willingness by Treasury officials to deepen taxpayer exposure to GMAC reflects the troubled company's importance to the revival of the auto industry. Founded in 1919, GMAC has $181 billion in assets and is a major financier for 15 million borrowers and thousands of General Motors and Chrysler car dealerships.



The new capital would help firm up GMAC's balance sheet and solidify its auto-loan business. GMAC provides the vast majority of wholesale financing for GM dealerships across the country, meaning thousands would be unable to bring new vehicles onto their lots if GMAC were to collapse.
Federal officials also are moving to shore up GMAC's ability to fund its daily operations, with the Federal Deposit Insurance Corp. telling the company Tuesday the agency will guarantee an additional $2.9 billion in debt, according to people familiar with the discussions. The FDIC guarantee will make it easier for the company to sell debt to investors. The FDIC backed $4.5 billion in GMAC-issued debt earlier this year.
...

it appears the nationalized auto lender will need another substantial govt intervention to pump funding into the entity to keep it going.

[jimotis4heisman]

Politicians Butt In at Bailed-Out GM - WSJ.com

...
Federal support for companies such as GM, Chrysler Group LLC and Bank of America Corp. has come with baggage: Companies in hock to Washington now have the equivalent of 535 new board members -- 100 U.S. senators and 435 House members.
Since the financial crisis broke, Congress has been acting like the board of USA Inc., invoking the infusion of taxpayer money to get banks to modify loans to constituents and to give more help to those in danger of foreclosure. Members have berated CEOs for their business practices and pushed for caps on executive pay. They have also pushed GM and Chrysler to reverse core decisions designed to cut costs, such as closing facilities and shuttering dealerships.
...

lots of examples of this nationalization and how the result has been difficult to navigate with congressional and administrative powers spread across washington. this is something we discussed and how it would be a potential problem and roadblock in getting gm/chrysler (and the other nationalized entities, companies and industries) back to operational functionality.

[MaxBuck]

Let me just offer this: if the only long-term outcome of government ownership of numerous large corporations is a damper on salary of senior executives, then some value will have been received. One of the greatest corporate problems of the past 25 years has been the explosion in top exec pay scales, with precious little in the way of objective rationale. The problem is that upper managers operate as a sort of "free agent cabal" similar to what one sees in MLB. Granted, one can end up with an A-Rod, but one is equally likely to end up with a Jason Giambi.

[jimotis4heisman]

FBI Lets Barred Tycoon Visit U.S. - WSJ.com

One of Russia's most powerful tycoons -- barred entry to the U.S. for years due to U.S. government concerns about possible ties to organized crime -- visited the country twice this year under secret arrangements made by the Federal Bureau of Investigation.
Aluminum magnate Oleg Deripaska met with FBI agents in August and earlier this month as part of a continuing criminal probe, according to two administration officials. The focus of that probe couldn't be learned.
...
Mr. Deripaska also stopped in Detroit to meet with top executives at General Motors Co. to discuss the sale of a stake in its Adam Opel AG unit to a Russian-backed consortium that includes Mr. Deripaska's AO GAZ auto maker, people familiar with the visit said.
The State Department, which rules on requests for U.S. visas, hasn't publicly said why it previously denied entry to Mr. Deripaska, and declined to comment on the recent visits.
...

the guy himself makes up 2% of the russian gdp, toss in his mob...and its substantially more...

[Gatorubet]

We need more stimulous

[jimotis4heisman]

The Columbus Dispatch - News


this appears to be a relatively big deal. ford is voting to ratify their union contracts to be in line with the b.r. deals struck by chrysler and gm.