Ford's "Bailout" Ad Saga Continues

[akirby]

To extend your analogy, GM/Chrysler's chapter 11 would be like half your neighbors getting loan modifications, instead of being foreclosed on, at a time when you happen to be trying to sell your house. You're benefiting a ton from your neighbors' assistance, since you're not gonna have a shot in hell at getting a decent price if half the homes in your neighborhood are selling as REOs.

 

 

Now in that situation, you come along afterwards and claimed you sold for a good price because you avoided foreclosure - ignoring that you would have had to sell at a loss if your neighbors hadn't gotten assistance. To pretend that your outcome rests solely on your own virtues, you have to be either a self-righteous prick or flat-out lying.

 

If Ford was claiming that the government should not have bailed out GM and Chrysler then I would agree with you. That would be disingenuous. But that's not at all what they're claiming. They're just saying that we were able to stay in business on our own and the others needed Chapter 11 and special help from the government which is totally true.

 

In your example you're happy your neighbors got help because it helped you sell your house at a fair price. However, that doesn't excuse the fact that you were not in danger of defaulting on your loan while your neighbors were.

[jpd80]

Last thought on the topic: Suppose GM had been liquidated -- where in the world is the only place besides the federal government that had vast sums of liquidity in mid-2009, and has also been showing an interest in getting into the US car market?

 

Imagine if GM where flying the flag of China at their headquarters today?

 

Renaming vehicles from Chery to Chevy would not have been such a difficult transition, after all...

 

For the record I didn't say that GM should not have been helped,I said they shouldn't have been helped so much.

 

GM should have received loans (repay the government) instead of a spin and rinse CH 11 with government ownership.

Which is basically what happened with Chrysler, they received government loans and partnering with Fiat.....see the difference?

 

Chrysler through Fiat has now repaid their $19 billion government loan plus $2 billion interest by refinancing elsewhere.

But now, GM is off the hook with $32 billion cash and the government and tax payers are looking at a $15 billion loss.

 

That is my one and only distinction on the matter, all the rest I'm fine with as I never wanted GM to fail.

Ford's success is due to their own good work, not the misfortune of competitors.

Edited October 2, 2011 by jpd80

[RichardJensen]

Ford execs certainly objected, on the record, to aspects of the bailout as executed:

 

http://washingtonexaminer.com/business/2009/06/ford-objects-unfair-advantage-bailed-out-gmac

 

Further, I suspect that certain aspects of the bailout ($16B slush fund, $43.5B in retained tax assets) were perceived by Ford execs as being contrary to the corporation's stated position below:

 

We look forward to working with the Obama administration to ensure that the government's majority ownership of GM will not change the industry's competitive dynamics and that a level playing field will be maintained

(emphasis added, of course)

http://www.autoblog.com/2009/06/01/ford-makes-statement-on-gm-bankruptcy-hopes-for-level-playing-f/

 

You see plenty of people spouting off about Ford taking subsidized loans (e.g. the CPFF and the DOE program), but the bottom line is that these are loans. The TARP program, as applied to the benefit of GMAC, Chrysler and GM consisted of outright equity stakes purchased by the government at valuations far in excess of market.

 

There is a significant difference between subsidized borrowing (which nearly every homeowner in the US does, by means of the mortgage interest deduction) and the use of TARP funds on GMAC, Chrysler and GM.

 

All Ford's subsidized loans (again, more or less equivalent to home mortgages which are also subsidized indirectly by tax expenditures) are enforceable contracts guaranteeing repayment. The TARP investments on GMAC, GM and Chrysler carry no guarantee of repayment, and in fact the government is extremely unlikely to be made whole by GM-------let alone generating anything approaching a positive return on their investment

[Noah Harbinger]

Ford execs certainly objected, on the record, to aspects of the bailout as executed:

 

http://washingtonexa...bailed-out-gmac

 

Further, I suspect that certain aspects of the bailout ($16B slush fund, $43.5B in retained tax assets) were perceived by Ford execs as being contrary to the corporation's stated position below:

 

(emphasis added, of course)

http://www.autoblog....evel-playing-f/

 

 

Very interesting! My googling was focused on trying to find something by Mulally, which is probably why that never came up for me.

 

You do have to note there is only one quote in the Washington Examiner article (aside: I've never heard of them, but apparently they're a free local daily - I find it odd that they include a quote from a source who was not introduced or identified in the article) from Ford itself:

 

"We don't really know yet what the effects will be of the government's actions and whether GMAC will have a total cost advantage to us," said Hines.

 

The rest is speculation from Republican lawmakers, who opposed the action on ideological grounds, and may have had ulterior motives for claiming "This will hurt Ford".

 

GMAC, of course, is now only 4% owned by (new) GM.

 

All Ford's subsidized loans (again, more or less equivalent to home mortgages which are also subsidized indirectly by tax expenditures) are enforceable contracts guaranteeing repayment. The TARP investments on GMAC, GM and Chrysler carry no guarantee of repayment, and in fact the government is extremely unlikely to be made whole by GM-------let alone generating anything approaching a positive return on their investment

 

Considering the federal, state, and local governments bring in tax revenue just by keeping people employed and buying/selling vehicles, I think they'll break even in the long run, even if we lose billions on selling the shares to the public.

Edited October 3, 2011 by Noah Harbinger

[RichardJensen]

Hines is identified earlier in the article (or in a non-edited Bloomberg version):

 

Brenda Hines, a spokeswoman for lending arm Ford Motor Credit, said the automaker is speaking with the government about the credit markets.

 

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awL36kf4vk5c

 

No Ford representatives appeared at the hearing referenced in the article.

[Noah Harbinger]

Hines is identified earlier in the article (or in a non-edited Bloomberg version):

 

 

 

http://www.bloomberg...id=awL36kf4vk5c

 

No Ford representatives appeared at the hearing referenced in the article.

 

I was referring to "Proia", who was quoted in the same paragraph that HInes was quoted. Proia's not introduced in the Bloomberg version either.

[RichardJensen]

Editorial oversight. I'm sure the source is legit. I figure her full name and position were stated in an earlier sentence that was cut.

 

Her name is Gina Proia, and at the time she was in charge or about to be in charge of communications at Ally neé GMAC.

 

http://media.ally.com/index.php?s=20&item=127

Edited October 4, 2011 by RichardJensen