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Posts Tagged ‘Auto Bailouts’

Breaking News; Ford and UAW Reach Settlement

Chrysler left to settle.

by on Oct.04, 2011

The settlement is expected to see Ford add production of the next-generation Fusion - its design based on this Evos Concept -- at a plant in suburban Detroit, saving thousands of jobs.

Ford and the United Auto Workers Union have reached a tentative settlement covering the automaker’s U.S. hourly workers. The two sides are expected to hail the development as a critical step in maintaining the competitiveness of the domestic auto industry – and bringing jobs back.

The agreement comes more than two weeks after the UAW was able to hammer out an agreement with General Motors and is expected to follow the pattern of the GM agreement.  That would mean substantial bonuses and a small raise for tier-two workers currently earning about half as much as veterans on the line.

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But Ford is also expected to benefit from the agreement, as did GM, through terms designed to improve productivity and offset any added costs.  That is expected to result in the addition of new union jobs, while also helping Ford keep open a plant in the Detroit suburbs many had expected might close.

Ford officials will outline their view of the agreement during a news conference this morning, UAW leaders following several hours later.  TheDetroitBureau.com will have coverage following those events.

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Car Czar Bloom Leaving White House

Helped oversee auto bailout, new fuel economy mandates.

by on Aug.11, 2011

Fiat/Chrysler CEO Sergio Marchionne talks with White House auto czar Ron Bloom in May.

One of the key figures in the bailouts that saved Chrysler and General Motors – and a driving force behind the compromise that will nearly double U.S. automotive fuel economy standards – is leaving his post at the White House.

Former investment banker Ron Bloom will leave his post as the senior automotive advisor to President Barrack Obama by the end of the month, though it does not appear he has lined up a new job, according to White House sources.

Bloom was the nation’s “car czar” until earlier this year when Congress pulled the budget for his post, but he remained the top auto advisor to the president, officially in the role of Assistant to the President for Manufacturing Policy.

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The 56-year-old originally joined the new administration in February 2009, just weeks after Obama took office and had to address the rapidly-failing fortunes of Detroit’s auto industry.  Bloom first served as assistant to the first White House auto czar, Steve Rattner, but Bloom took over the top spot after that former banker and one-time journalist left Washington following the emergence of Chrysler and GM from bankruptcy.

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Bye-Bye Car Czar

Post among many impacting auto industry cut by federal budget compromise.

by on Apr.12, 2011

The last and former car czar Ron Bloom.

The last-minute budget compromise that kept the federal government going will take its toll on the auto industry – among other things eliminating the “car czar” position that helped the White House manage the 2009 bailouts of General Motors and Chrysler.

The bipartisan budget agreement also will trim $408 million from the $2.3 billion originally set aside to help promote research on high-mileage technology, along with another $37 million earmarked to promote seatbelt usage.

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There are actually four different “czar” posts being defunded.  And the one overseeing the auto bailouts, held most recently by Ron Bloom, has been empty since he left the White House last February.  It was originally intended to give oversight to bailouts that included $50 billion needed to keep General Motors in business.

While the elimination of that position might not draw too many tears in Detroit the industry is clearly less pleased to see the government take a sharp knife to a program that is helping fund the high-cost development of advanced powertrain systems.  Funds have so far been dispersed to a wide range of manufacturers, domestic and foreign, as well as to start-up makers, including battery car manufacturer Tesla Motors and Fisker Automotive, which plans to launch production of a plug-in hybrid vehicle later this year.

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GM’s Fired Fritz Henderson Surfaces at Sunoco

Henderson will become Chairman and CEO of SunCoke Energy.

by on Sep.07, 2010

Then GM CEO Fritz Henderson announces the Chevrolet Volt, the electric car designed to put oil companies out of business.

Sunoco, Inc. has announced that Frederick A. “Fritz” Henderson has joined the company as a senior vice president to help prepare for a previously announced separation of SunCoke Energy from parent Sunoco.

Coke is a key ingredient in steel, of course, a material that auto companies are large purchasers of during their often contentious relationships with suppliers.

Sunoco said last June that  it would separate SunCoke Energy from itself as part of a well-worn Wall Street strategy “designed to unlock shareholder value.” This type of financial engineering ploy clearly didn’t work in the now notorious auto industry captive  component maker spinoffs – GM’s Delphi and Ford Motor’s Visteon. Both transactions ultimately resulted in bankruptcies and costly shareholder losses.

SunCoke facilities in the U.S. have the capacity to manufacture approximately 3.67 million tons of metallurgical coke annually – roughly 25% of domestic production. Sunoco also has an equity interest in a 1.7 million tons-per-year coke-making facility in Vitoria, Brazil.

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Biden Boasts Recovery Act Spurs Innovation

Four major science and technology breakthroughs promised.

by on Aug.25, 2010

The perfect campaign speech with promises that can't be checked for years.

Vice President Joe Biden has unveiled a new report that claims last year’s politically unpopular – and, gulp, $787 billion — Recovery Act contains $100 billion in investment in innovation that is not only “transforming the economy and creating new jobs,” but helping “accelerate advances” in science and technology.

More than the usual political folderol is involved here, in my opinion, as the Democrats turn up their rhetoric in defense of their management of a sputtering economy in the face of what appears to be an upcoming huge political backlash directed at tax and spend incumbents in the mid-term elections this fall. Biden’s assertions could also be the forerunner of a new move to propose another gigantic stimulus package if the Democrats remain in Congressional power after November.

The claims in the report, “The Recovery Act: Transforming the American Economy through Innovation,” are dubious in my view given the current state of the technologies involved, but ideal from a campaign perspective since they cannot be verified until years after the election – if anyone bothers or remembers.

And of course, there is no taxpayer “money back guarantee” offered from the Administration if the promises vanish into the ether and the companies and universities receiving the funding don’t deliver the innovations.

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Following Your Money!

Remember the Partnership for a New Generation of Vehicles, which channeled millions upon millions of taxpayer dollars into national labs and the Detroit Three automakers in search of an 80 mpg car? Not one has been built to this day.

Worse, the real outcome was that Toyota, which was excluded from the pork festival for political reasons, went on its own innovation tear and with the help of the Japanese government developed its world leading hybrid technology while Detroit went back to investing in and building gas guzzlers and issuing press releases about a green future car that never arrived.

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Taxpayer Owned GMAC Rebrands as Ally

The $100 billion GMAC auto finance operation moves on.

by on Jul.14, 2010

Your dollars are in his hands. If he cleans up the GMAC mess, taxpayers will be paid back.

Ally Financial Inc. (Ally) will rebrand its GMAC consumer and dealer-related auto finance operations in the U.S., Canada and Mexico and begin using the Ally name next month.

The latest move follows the transition of the GMAC corporate entity to Ally Financial during May 2010.

Both are attempts to leave behind GMAC’s tattered image and distance the company from the wildly unpopular taxpayer financed bailouts of last year.

The Ally brand will be used for auto financing activities in the three North American markets, including activities to support the following manufacturers: General Motors, Chrysler, Saab, Thor Industries and FIAT Mexico.

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Following the Money!

The U.S. Department of the Treasury last December provided an additional $3.8 billion in capital from taxpayers to GMAC to keep it solvent, in addition to almost $14 billion previously forwarded. (See Taxpayer Owned GMAC Reports Record Q4 Loss and U.S. Takes Controlling Interest of GMAC ) Results for the 2009 fourth quarter and full year were largely affected by losses related to GMAC’s reckless lending practices in its mortgage operations.

The Obama Administration has thus far been unable to implement any reforms whatsoever in financial regulation after the collapse of the Lehman brothers or AIG, among others, in the fall of 2008.

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Chrysler One Year Later

Marchionne outlines challenges in an internal e-mail.

by on Jun.11, 2010

Profits are still elusive.

Chrysler CEO Sergio Marchionne sent an e-mail today to surviving employees on the anniversary of its emerging from a “quick rinse” bankruptcy one year ago.

The company is still losing money and is struggling with an aging product line, poor quality and numerous recalls.

However, Marchionne takes a cautiously optimistic tone in a communication that would obviously find its way into the media.

Below is the memo:

Dear Colleagues,

Today marks the first day of our second year as a new company. Chrysler Group LLC in fact began operations on June 10, 2009, and when I met with you on that day, I expressed confidence that Chrysler would once again be a strong and competitive car maker.

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It's Free!

Crisis can bring out the best in a company and its people. Rather than yield to pessimism, our organization has moved forward with a renewed sense of purpose to succeed. Through hard work and tough choices, we made significant progress during the past 365 days.

Among the highlights:

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Taxpayer Owned GMAC Reports Record Q4 Loss

The preferred lender to reorganized Chrysler Group and General Motors Company remains in intensive care. Outlook uncertain.

by on Feb.04, 2010

Your dollars are in his hands. If he cleans up the mess, taxpayers will be paid back.

GMAC reported this morning a record Quarter 4 loss of $3.9 billion from ongoing operations, compared with a profit of $7.5 billion a year earlier.

A net loss of $5.0 billion bought the total full-year net loss to $10.3 billion, compared to net income of $1.9 billion in 2008.

Results for the 2009 fourth quarter and full year were largely affected by losses related to GMAC’s reckless lending practices in its mortgage operations.

“Key steps during the year included: diversifying the profitable automotive finance business with the addition of Chrysler; launching the Ally Bank brand, which is a key part of our funding profile; strengthening our capital and liquidity positions; and implementing major restructuring actions to minimize risk related to the legacy mortgage business,” said GMAC Chief Executive Officer Michael A. Carpenter.

The U.S. Department of the Treasury last December provided an additional $3.8 billion in capital from taxpayers to GMAC to keep it solvent, in addition to almost $14 billion previously forwarded.

Treasury under its financial health check assessment, the so-called Supervisory Capital Assessment Program (SCAP), said that additional capital was needed for tottering GMAC, which was suffering from bad loans and collapsed residual values for leases of General Motors vehicles, as well as failed loans in the real estate markets.

As part of the additional funds, Treasury restructured its investment in GMAC “to protect taxpayers and put GMAC in a position to raise private capital and pay back taxpayers as soon as practicable.” As a result, U.S. taxpayers now own 56% of GMAC’s common equity, and $2.7 billion in 8% coupon trust preferred securities, and $11.4 billion in 9% coupon mandatory convertible preferred stock. Taxpayer ownership could increase to 70%, according to GMAC.

Taxpayers are clearly at risk here, given their already large 50% holding of General Motors Company, which lost $1.2 billion in its latest quarter.

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Follow Your Money!

The Obama Administration, facing unanimous Republican opposition, has thus far been unable to implement any reforms whatsoever in financial regulation 16 months after the collapse of the Lehman Brothers and AIG, among others, in the fall of 2008.   (more…)

U.S. Takes Controlling Interest of GMAC

Latest U.S. taxpayer bailout costs another $3.8 billion.

by on Dec.30, 2009

GMAC was unable to raise the capital needed from the still ailing private markets, so our Treasury became the lender of last resort.

The U.S. Department of the Treasury announced this afternoon that it is providing an additional $3.8 billion in capital from taxpayers to GMAC to keep it solvent.

Treasury under its financial health check assessment, the so-called  Supervisory Capital Assessment Program (SCAP), said last May that additional capital of $5.6 billion would be needed for tottering GMAC, which was suffering from bad loans and collapsed residual values for leases of General Motors vehicles, as well as failed loans in the collapsed real estate markets.

GMAC now has the capital buffer required under SCAP, which is needed to meet the worse-than-expected economic scenario after the economic stimulus program proved ineffective at turning the economy around. The $3.79 billion cash infusion was less than the $5.6 billion originally anticipated by the Federal Reserve due in large part to lower-than-expected losses from the General Motors bankruptcy filing.

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Bailouts!

In November, GMAC announced that its head had departed and a new CEO, Michael A. Carpenter, was coming in from the financial services industry and taxpayer subsidized Citigroup. The appointment of Carpenter, with disputed accounts of whether the previous CEO, Alvaro de Molina, was fired or had resigned, raised questions about the reckless practices of Wall Street, which is responsible for the ongoing Great Recession and the collapse of the global banking system.

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GMAC Needs Another, Yet Another, Bailout

Financial services provider to Chrysler and GM remains ill.

by on Nov.17, 2009

t

Wants less cash?

GMAC Financial Services (GMAC) is under scrutiny today after an announcement late yesterday that its head had departed and a new CEO, Michael A. Carpenter, was coming in from the financial services industry.

The bank holding company remains in trouble over bad loans in the housing and auto markets.

The appointment of Carpenter, with disputed accounts of whether the previous CEO, Alvaro de Molina, was fired or resigned, also raised questions about the reckless practices of Wall Street, which is responsible for the ongoing Great Recession and the collapse of the global banking system.

What this means for car buyers or U.S. taxpayers is not immediately clear — beyond the obvious observation that the credit markets are still not fixed and more raids on the U.S. Department of the Treasury are forthcoming.

This is wreaking havoc with the economy, which has the highest unemployment rates since the Great Depression, and as the Obama Administration privately contemplates another stimulus programs to fix its previously failed stimulus program that was an attempt to fix the failed economy under the Bush Administration.

Carpenter, 62, has only served on the GMAC board since May of this year. His previous experience includes CEO positions at Citigroup’s Global Corporate & Investment Bank, Salomon Smith Barney, Travelers Life & Annuity and Kidder Peabody. During his 35-year career, Carpenter has also held senior positions at GE Capital, General Electric and Boston Consulting Group.

The Obama Administration has thus far been unable to implement any reforms whatsoever in financial regulation more than one year after the collapse of the Lehman brothers or AIG, among others, last fall.

Follow The Money!

Follow The Money!

Perhaps most troubling for taxpayers, who have already bailed out bankers and irresponsible financial institutions with almost a trillion dollars in borrowed money — that is trillion — is that the board of GMAC also said that it had asked the Treasury to postpone its decision on an additional injection of capital.

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