Israel Commentary
Ford Motor, Obama and TARP (Troubled Asset Relief Program)
Newsmax Magazine September 2010
"The Hype does not match the reality"
FORD MOTOR CO.'S REFUSAL to take a government bailout in 2009 seemed like an act of pure business bravado. Today, it seems brilliant. Despite record losses and plummeting sales, (at that time), Ford spumed a financial lifeline in the form of controversial Troubled Asset Relief Program, or TARP, funds in January 2009. Ford's rivals at General Motors and Chrysler, however, snapped up billions in bailout cash. While Ford has weathered the recession and seen sales stabilize, GM and Chrylser have struggled to repay their debts and have been damaged by onerous federal meddling in their businesses that came attached to the TARP funds. Perhaps worst of all is the damage to their reputations as poorly managed corporate welfare recipients who have been unwilling to pay back the government that rescued them.
(Not to mention the very questionable diversion of near 1/3 of their assets to the United Auto Workers, reneging on corporate bond obligations to the general public and pension funds in which they had placed their life savings) jsk.
When General Motors claimed in April that it had re-paid $6.7 billion it took from the government, a top Republican lawmaker fired back, saying that the automaker simply shuffled federal bailout funds to pay back taxpayers. Sen. Charles Grassley of Iowa scolded GM for failing to acknowledge that the government still owns nearly 61 percent of the Detroit automaker. He questioned whether taxpayers would ever be compensated fully: "The hype does not match the reality. Taxpayers have not been repaid in full - far from it. Much of it will never be repaid."
In fact, GM made the loan payment from a $16 billion escrow fund the government created as part of the company's bankruptcy last year. Also, the majority of the $52 billion in federal aid to GM was converted into a 61 percent government ownership stake. Grassley calls it "an elaborate TARP money shuffle amounting to "taking TARP money out of one account to pay back TARP loans in another account."
Chrysler has paid back $1.9 billion to settle a $4 billion TARP loan. In a statement, a Treasury spokesman said. This repayment, while less than face value, is significantly more than the Treasury expected to recover on this loan." The government owns 9 percent of Chrysler. By taking the money, GM and Chrysler also were saddled with another burden Ford avoided: government orders for drastic business decisions such as shuttering under-performing dealerships.
The governments's own auditor recently concluded that the hasty decision to close scores of dealerships actually exacerbated job loss, while failing to achieve the promised cost savings. GM shutdown more than 2,000 dealer Chrysler eliminated 789 dealers, or about a quarter of its network, with less than a month's notice.
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