Autos Insider | U.S. boosts estimate of auto bailout losses to $23.6B | The Detroit News

David Shepardson/ Detroit News Washington Bureau

The Treasury Department dramatically boosted its estimate of losses from its $85 billion auto industry bailout by more than $9 billion in the face of General Motors Co.'s steep stock decline. 

In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion, up from its previous estimate of $14.33 billion. 

The Treasury now pegs the cost of the bailout of GM, Chrysler Group LLC and the auto finance companies at $79.6 billion. It no longer includes $5 billion it set aside to guarantee payments to auto suppliers in 2009.

The big increase is a reflection of the sharp decline in the value of GM's share price. 

The current estimate of losses is based on GM's Sept. 30 closing price of $20.18, down one-third over the previous quarterly price. 

GM's stock closed Monday at $22.99, up 2 percent. The government won't reassess the estimate of the costs until Dec. 30. 

The government has recovered $23.2 billion of its $49.5 billion GM bailout, and cut its stake in the company from 61 percent to 26.5 percent. But it has been forced to put on hold the sale of its remaining 500 million shares of stock. 

The new estimate also hikes the overall cost of the $700 billion Troubled Asset Relief Program costs to taxpayers. TARP is the emergency program approved by Congress in late 2008 at the height of the financial crisis. 

In total, the government used $425 billion to bailout banks, insurance companies and automakers, and provided $45 billion in housing program assistance. 

The government now expects to lose $57.33 billion, including the full cost of the housing program, up from $36.7 billion. The new estimate means the government doesn't believe it will make an overall profit on its bailouts.

Autos Insider | U.S. boosts estimate of auto bailout losses to $23.6B | The Detroit News

President Obama’s phony accounting on the auto industry bailout - The Fact Checker - The Washington Post

With some of the economic indicators looking a bit dicey, President Obama traveled to Ohio last week to tout what the administration considers a good-news story: the rescue of the domestic automobile industry. In fact, he also made it the subject of his weekly radio address.

We take no view on whether the administration’s efforts on behalf of the automobile industry were a good or bad thing; that’s a matter for the editorial pages and eventually the historians. But we are interested in the facts the president cited to make his case.

What we found is one of the most misleading collections of assertions we have seen in a short presidential speech. Virtually every claim by the president regarding the auto industry needs an asterisk, just like the fine print in that too-good-to-be-true car loan.

Let’s look at the claims in the order in which the president said them.

“Chrysler has repaid every dime and more of what it owes American taxpayers for their support during my presidency — and it repaid that money six years ahead of schedule.  And this week, we reached a deal to sell our remaining stake. That means soon, Chrysler will be 100 percent in private hands.”

Wow, “every dime and more” sounds like such a bargain. Not only did Chrysler pay back the loan, with interest — but the company paid back even more than they owed. Isn’t America great or what?

Not so fast. The president snuck in the weasel words “during my presidency” in his statement. What does that mean?

According to the White House, Obama is counting only the $8.5 billion loan that he made to Chrysler, not the $4 billion that President George W. Bush extended in his last month in office. However, Obama was not a disinterested observer at the time. According to The Washington Post article on the Bush loan, the incoming president called Bush’s action a “necessary step . . . to help avoid a collapse of our auto industry that would have had devastating consequences for our economy and our workers.”

Under the administration’s math, the U.S. government will receive $11.2 billion back from Chrysler, far more than the $8.5 billion Obama extended.

Read more here: President Obama’s phony accounting on the auto industry bailout - The Fact Checker - The Washington Post

Its good to be in business with the government. Sure they dictate company policies, like building electric cars rather than SUVs, and sure they make you give pay raises for union employees that don't deserve it. But if you don't have to pay taxes who cares about that other stuff.

You know who it sucks to be? Ford. They didn't take a dime from the government, they negotiated with their Union and got rid of their pension obligations, they paid off their debts and it doesn't matter that they played by the rules because GM will be kicking their ass in three years because of this communist bullsh*t.

GM Could Be Free of Taxes for Years

 By RANDALL SMITH and SHARON TERLEP

General Motors Co. will drive away from its U.S.-government-financed restructuring with a final gift in its trunk: a tax break that could be worth as much as $45 billion.

GM, which plans to begin promoting its relisting on the stock exchange to investors this week, wiped out billions of dollars in debt, laid off thousands of employees and jettisoned money-losing brands during its U.S.-funded reorganization last year.


Now it turns out, according to documents filed with federal regulators, the revamping left the car maker with another boost as it prepares to return to the stock market. It won't have to pay $45.4 billion in taxes on future profits.

The tax benefit stems from so-called tax-loss carry-forwards and other provisions, which allow companies to use losses in prior years and costs related to pensions and other expenses to shield profits from U.S. taxes for up to 20 years. In GM's case, the losses stem from years prior to when GM entered bankruptcy.

Usually, companies that undergo a significant change in ownership risk having major restrictions put on their tax benefits. The U.S. bailout of GM, in which the Treasury took a 61% stake in the company, ordinarily would have resulted in GM having such limits put on its tax benefits, according to tax experts.

But the federal government, in a little-noticed ruling last year, decided that companies that received U.S. bailout money under the Troubled Asset Relief Program won't fall under that rule.

"The Internal Revenue Service has decided that the government's involvement with these companies, both its acquisitions plus its disposals of their stock, means they should be exempt" from the rule, said Robert Willens, a New York tax consultant who advises investment banks and hedge funds.


The government's rationale, said people familiar with the situation, is that the profit-shielding tax credit makes the bailed-out companies more attractive to investors, and that the value of the benefit is greater than the lost tax payments, especially since the tax payments would not exist if the companies fail.

GM declined to comment.

The $45.4 billion in future tax savings consist of $18.9 billion in carry-forwards based on past losses, according to GM's pre-IPO public disclosure. The other tax savings are related to costs such as pensions and other post-retirement benefits, and property, plants and equipment.

GM may avoid paying up to $45 billion in taxes for up to 20 years, according to people familiar with the situation. Above,GM's Cadillac logo is displayed on the grill of a Cadillac SRX.

The losses were incurred by "Old GM," the company that remained in bankruptcy after the current "New GM" resulted from the reorganization last June.

 

 

 

Chrysler Autoworkers Caught on Camera Drinking Beer, Smoking Pot During Break

Is it any wonder that the Japanese, Koreans and Chinese are kicking our collective asses when it comes to manufacturing? Thanks guys. You are a disgrace to every unemployed American and to your union brothers. Unfortunately, all these guys have to do is say they have a drinking problem and its off to rehab while they continue to get paid. Its great to be an American Union worker.

Still Report #13 March 31, 2010, re: NASA and Big Banks

I didn't fully realize how badly NASA was being underfunded by the Obama administration. It is a sad day when we bailout greedy bankers and auto unions but not our space agency. The solutions he proposes appear to be sound and the dollar amounts needed by NASA are not very large in comparison to true government waste by the Federal government.

Also the Bank of North Dakota sounds like a really good idea and should be something that other state governments should begin to emulate. Why should our tax dollars be given to banks, which then turn around and lend the money to the states at exorbitant interest rates? It doesn't make any fiscal sense.

'Old GM,' Bad Assets Linger On

While the New GM is planning to issue an IPO in the Fall:

General Motors Co plans to file its registration for an initial public offering during the week of August 16, just after the expected date for its second quarter results, according to two people with direct knowledge of the preparations.

A GM filing with the U.S. Securities and Exchange Commission would be the first step toward an IPO to reduce the U.S. government's ownership in the automaker after a $50 billion bailout in 2009.

By filing with the SEC in August, GM is aiming to complete its IPO before the November U.S. elections, according to the sources, who asked not to be named because the closed-door preparations remain confidential.

http://abcnews.go.com/Business/wireStory?id=11233100

The OLD GM aka GM Liquidation is a toxic wasteland that hasn't had much success in selling off properties in this sh*tty economy.

By MIKE SPECTOR

A year into the process of shedding GM's "bad assets," only one former factory and a few other properties have found a second life.

The vast majority of the auto maker's closed offices, decrepit plants and parts depots that were left behind in bankruptcy court remain on the market or are slated for demolition. Some of the properties are contaminated with toxic waste; others are cavernous structures way too big for alternative uses. Few sport good locations.

It could take years to dispose of the 200 remaining properties, the detritus of one of the country's biggest-ever bankruptcies.

Washington last year pumped $50 billion into General Motors to prevent the car maker's collapse and decreed that its "good" assets should be split from the "bad" assets. The U.S. steered GM through a quick bankruptcy sale that sent its best assets to a new, leaner company, now 61% owned by U.S. taxpayers.

The rest of the assets were left in bankruptcy court with "Old GM," a shell of the once-dominant auto maker, renamed Motors Liquidation Co.

The Treasury lent $1.175 billion to Motors Liquidation to help administrators get rid of GM's worst albatrosses. The government didn't expect to recoup the loan. Instead it decided to subsidize Old GM's cleanup and focus on creating a viable "New GM."

Motors Liquidation pegged the value of all its assets at around $2.3 billion in court papers, but officials have conceded from the start they won't come close to recovering that amount.

Unburdened of excess capacity, outmoded factories and much of its debt, the new General Motors Co. produced a $1.2 billion operating profit in the first quarter.

But there is some good news Old GM was able to sell off a former factory in Delaware for $20 million. The only problem is that the factory was sold to a company that received a $500 million loan from the Government to build electric hybrid cars.

Meanwhile, Motors Liquidation has sold one former factory. A judge in June approved Fisker Automotive's plans to buy an old GM plant in Wilmington, Del., for $20 million and use it to build plug-in electric hybrids starting in late 2012. But even that deal wouldn't have come about without government funds: The U.S. provided $529 million in loans to Fisker as part of a plan to stimulate development of advanced-technology vehicles.

http://online.wsj.com/article/SB20001424052748703720504575377471751017174.html
So let me get this straight we have loaned over $51.5 billion to Old GM, New GM and Fisker and we have received a total of $20 million of our own money back so far. Sounds like a deal that would put any other business in bankruptcy court but come November it will be touted as great success by the politicians that voted for the bailout.

Government Motors Has a Truth Problem

I guess the FTC and FCC won't be investigatng GM as that would only anger the Boss and the Unions that helped to get him elected. What a load of horses*it we are getting fed. My question is why isn't this frontpage news in the Washington Post and NY Times I guess they are too busy sucking up to the President to do their job.

Still Government Motors
Shikha Dalmia, 04.23.10, 03:40 PM EDT
GM is paying back Uncle Sam to shake him down for more money.

GM CEO Ed Whitacre announced in a Wall Street Journalcolumn Wednesday that his company has paid back its government bailout loan "in full, with interest, years ahead of schedule." He is even running TV ads on all major networks to that effect--a needless expense given that a credulous media is only too happy to parrot his claims for free. Detroit Free Press' Mike Thompson, for example, advises bailout proponents to start "warming up their vocal chords" to jeer their opponents with chants of "I told you so."

But before belting out their victory aria, GM-boosters ought to hear the whole story--not just the fairytale version about Government Motors' grand comeback that Mr. Whitacre is feeding them.

http://www.forbes.com/2010/04/23/general-motors-economy-bailout-opinions-columnists-shikha-dalmia.html?boxes=opinionschannellatest

The American Auto Industry Is Done

If the U.S. government wasn't owed so much money these companies would dead right now. It was so bad last year that Chrysler sold fewer than a million cars. The last time they did that was in the 1960's when the population was half the size it is today. It is only a matter of time before we are making another loan to these fossils just like we continue to do with AIG, GMAC, Fannie and Freddie to keep them afloat.

Sorry folks but bad companies have to go away so that the can make room for new companies. I would have rather seen the Auto loans go to a company like Tesla, which is the future, rather than to a company that has had to be bailed out twice by the U.S Government.

http://money.cnn.com/2010/01/05/news/companies/auto_sales/