TARP | TheDetroitBureau.com
Detroit Bureau on Twitter

Posts Tagged ‘TARP’

Government Lost $9.26 Billion Saving Auto Industry

Treasury made more than $2 billion on GMAC deal.

by on Dec.30, 2014

The Treasury exited GM more than four years after the maker's 2009 bankruptcy.

The U.S. government lost less than $10 billion rescuing the auto industry, which was four times less than some estimates.

The Treasury initially estimated the loss would be $44 billion, but revised it to $30 billion in 2009. Under government accounting rules, the U.S. Treasury actually lost $16.56 billion on paper because interest and dividends paid isn’t applied toward the principal owed.

Subscribe for Free!

The government was repaid through a combination of stock sales, partial loan repayments, dividends and interest payments. (more…)

Taxpayers Taking Bigger Hit on GM Bailout

Total rises to $11.2 billion after accounting error.

by on Apr.30, 2014

The government bailout of General Motors is going to cost taxpayers $11.2 billion: $826 million more than originally expected.

U.S. taxpayers are taking a bigger loss on the General Motors bailout package than $10.3 billion originally reported. Due to an accounting error, the loss is actually $11.2 billion, according to a report released today.

The Treasury Department reported an $826-million administrative claim had been written off on March 20. However, the claim, which has not been revealed, cannot be written off.

In the Know!

The figure surfaced in a report by the Office of the Special Inspector General for the Troubled Asset Relief Program, which was charged with overseeing the federal government’s economic stimulus program. (more…)

President Obama to Visit Detroit Area Jeep Grand Cherokee and Chevrolet Volt Plants Today

Renewed push defending auto bailouts, touting job creation.

by on Jul.30, 2010

Without intervention a million jobs would have been lost, according to a new report.

President Obama will visit the Jefferson North plant of Chrysler in Detroit where Jeep Grand Cherokee models are made and then stop by a nearby General Motors plant in Hamtramck where the Chevrolet Volt hybrid will be built.

At both stops, and another next week at a Ford Explorer plant in Chicago, the President will promote the taxpayer programs that saved or created “Detroit Three” automaker jobs.

The unpopular bailouts and how much of the more than $80 billion used will be returned are one of many contentious election-year issues.

Both Chrysler and General Motors of course received billions of dollars in taxpayer financing to allow them to emerge from bankruptcies last year. And Ford Motor Company received billions to retool its plants.

As a result, the Administration will claim that the 2,800 jobs at Jefferson North and the 1,100 employees at Hamtramck, among thousands of others, were saved by the unpopular loans, which now has U.S. taxpayers as the majority holder in GM, with a substantial position in Fiat run Chrysler.

Ahead of the trip the Administration released a new study on the auto industry. It said that in the year before the Chrysler and GM bankruptcies, the companies lost almost 340,000 jobs.  In the year since then, 55,000 jobs have been added to these companies.

“If we hadn’t stepped in when we did, most observers believe at least a million jobs would have been lost,” said Ed Montgomery, the head of the White House Council on Automotive Communities and Workers.

“While there is still a long way to go, the report points out that the companies are also showing positive signs of financial performance. In the first quarter, all of them made operating profits. That’s the first time that’s happened since 2004,” said Montgomery.

Federal Report Criticizes Auto Dealer Closings

by on Jul.19, 2010

Clarkston Motors, one of many that have or will be dropped by GM and Chrysler.

A new report is harshly critical of the Obama Administration’s efforts to have General Motors and Chrysler sharply cull their distribution networks as part of their bankruptcy reorganization plans, last year.

Together, the two troubled companies agreed to shed thousands of retail outlets across the country – something corporate managers had actually long wanted to do – in order to receive billions of dollars in bailout funds GM and Chrysler needed to survive.

But the White House’s automotive overseers failed to consider the potential impact such dealer cuts would have both on individual jobs and on the communities that the targeted retailers serve says the report, released by the inspector general for the Troubled Asset Relief Program.  Also known as TARP, the program was initially created under the Bush Administration to help save the nation’s faltering banking industry.  It was later tapped by the Obama Administration to salvage GM and Chrysler.

http://www.thedetroitbureau.com/about/subscribe

Balanced Reporting!

“Job losses at terminated dealerships were apparently not a substantial factor in the Auto Team’s consideration of the dealership termination issue,” declared the audit of the $787 billion TARP program prepared by auditor Neil Barofsky.  But, it continued, “The fact that Treasury was acting in part as an investor in GM and Chrysler does not insulate Treasury from its responsibility to the broader economy.”

(more…)

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.

http://www.thedetroitbureau.com/about/subscribe

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.

(more…)

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.

http://www.thedetroitbureau.com/about/subscribe

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…)

President Vows to “Collect Every Dime” of Taxpayer Funds that Helped Big Banks

The real issue is “brother can you spare a dime.”

by on Jan.16, 2010

During the past two years, more than seven million U.S. residents have lost their jobs.

In this week’s address, President Barack Obama proposed a fee on major financial firms to recoup – on behalf of American taxpayers – the $700 billion paid out in TARP, saying, “we want the taxpayers’ money back, and we’re going to collect every dime.”

The latest populist appeal follows well-known political tactics used by both Republican and Democratic politicians to shift the focus from their lack of action on resolving issues. And one of the real issues that is at the core of the Troubled Asset Relief program – TARP–  is that almost three-quarters of trillion dollars of borrowed taxpayer money was spent with little if any positive effect on job creation.

During the past two years, more than seven million residents of the U.S. have lost their jobs. Moreover, our manufacturing sector – a great creator of jobs and wealth – is in tatters from the lack of industrial policies that all other industrial nations have long had.

U.S. taxpayers are outraged, to put it mildly, over the billions in Wall Street welfare payments they involuntarily made, which are now being recycled to financial executives in multi-million dollar bonuses. A clear majority are also against the auto bailouts. The banking bonus bumble is made more outrageous with U.S. unemployment growing to levels unseen since the Great Depression.

The fact that GM in a Security and Exchange Commission filing yesterday revealed that it is paying one Wall Street consultant on its Board, Stephen Girsky, almost $1 million a year is going to raise questions and increase the anger of opponents of taxpayer bailouts.

http://www.thedetroitbureau.com/about/subscribe

Policy Debates!

In a deft political move that has policy implications, President Obama is now proposing a Financial Crisis Responsibility Fee that would require the largest and most highly leveraged Wall Street firms to pay back taxpayers for the federal assistance provided, so that the TARP program does not add to the deficit. Whether the auto companies are mired in this populist controversy remains to be seen. Moreover, the bankers and Republican party are not going to embrace this bill.

(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.

http://www.thedetroitbureau.com/about/subscribe

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.

(more…)

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.

(more…)

Pelosi to Big 3: Bailout Must Pay Off for Taxpayers

Automakers warned they must meet CA CO2 standards.

by on Feb.16, 2009

Pelosi: bailout carries a stiff price

Pelosi: bailout carries a stiff price

Two key Democratic administration players sent a clear if contradictory message over the weekend to Chrysler and General Motors that they must radically reshape themselves by making profits while cutting costs and preserving jobs and benefits. This of course is what Chrysler, General Motors and Ford have been trying to do for years with little success.

In a letter, just released, Speaker of the House Nancy Pelosi and Financial Services Chairman Barney Frank wrote to Robert L. Nardelli, Chairman and CEO of Chrysler, and Rick Wagoner Jr., Chairman and CEO of General Motors. In it they insisted that their company restructuring plans due tomorrow must “demonstrate to the world that you are willing to make the tough decisions that modernize your operations, restructure your debt, enhance your competitive status in the global marketplace, and protect American jobs for the future.”

Pelosi from California and Frank from Massachusetts also demanded that the struggling companies demonstrate they can meet the fuel efficiency requirements set forth in the Energy Independence and Security Act of 2007 that requires a combined fleet average of at least 35 miles per gallon by model year 2020.

(more…)