In the next 12 to 15 months, the U.S. Treasury will sell all remaining General Motors stock in its possession — over 500 million shares. General Motors will buy back about 200 million of those shares at $27.50 before the year is over. By the time it’s all said and done taxpayers will have taken it on the chin (again) to the tune of about $14 billion:
General Motors plans to buy back $5.5 billion of its shares from the federal government, setting up a $14 billion loss to taxpayers on the company’s bailout.
“This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM’s progress and our future,” GM Chairman and Chief Executive Dan Akerson said in a statement.
The $5.5 billion stock buyback represents an 8 percent premium over Tuesday’s close, but it falls far short of the $53 per share that would have been needed to get a full payback to taxpayers for the GM bailout.
Naturally all parties involved waited until well after the election to move forward with this bit of news. Now that the union votes have already recorded, the private sector can have GM back now, along with the rest of the tab.
And just to bring it home, here’s an ad from 2010 featuring then-CEO Ed Whitacre thanking taxpayers and telling them they’d been “repaid in full” five years ahead of schedule:
Same old story: A city has been horribly mismanaged and run into the ground, and everybody should pay up so they can keep running it the same way:
DETROIT (WJBK) — The city of Detroit faces a major financial crisis and one member of city council thinks President Barack Obama should step in and help.
City Council member JoAnn Watson said Tuesday the citizens support of Obama in last month’s election was enough reason for the president to bailout the struggling the city.
“Our people in an overwhelming way supported the re-election of this president and there ought to be a quid pro quo and you ought to exercise leadership on that,” said Watson. “Of course, not just that, but why not?”
Nearly 75 percent of Wayne County voters pulled the lever for Obama in November.
“After the election of Jimmy Carter, the honorable Coleman Alexander Young, he went to Washington, D.C. and came home with some bacon,” said Watson. “That’s what you do.”
Young served as Detroit’s mayor for 20 years and served as vice chairman of the Democratic National Committee from 1977 to 1981.
The story doesn’t clarify the person in the room Watson is addressing, but I’m assuming the “you” she’s referring to is Detroit Mayor Dave Bing. The point though is abundantly clear: We voted for Obama and he owes us a bailout, so let’s go get it!
Anybody who’s genuinely concerned about getting Motown back on its feet would never advise a mayor to “do it the way Coleman Young did it”:
Running just beneath all the self-congratulatory campaign trail talk about President Obama saving GM and taxpayers being paid back is an ugly thing called reality, and it’s not nearly as rosy as they’re making it out to be:
Earlier this summer, GM floated a plan with Treasury officials to repurchase 200 million of the roughly 500 million shares the U.S. holds in the auto maker, according to people familiar with the discussions. Under the plan, Treasury would sell the remaining shares through a public stock offering.
But Treasury officials aren’t interested in GM’s offer at the current price and aren’t in a rush to offload shares, according to people familiar with the matter. The biggest reason: A sale now would leave the government with a hefty loss on its investment.
Normally a few billion dollars down the dumper wouldn’t be a major concern… unless it’s an election year:
At GM’s Friday share price of $24.14, the U.S. would lose about $15 billion on the GM bailout if it sold its entire stake. While GM stock would need to reach $53 a share for the U.S. to break even, Treasury officials would consider selling at a price in the $30s, people familiar with the government’s thinking have said.
There is also a political calculus. A deal at this time could be fraught for the Obama administration, which has maintained that the bailout saved hundreds of thousands of jobs at a critical time for the U.S. economy and was a win-win for business and taxpayers alike. Huge losses on taxpayer investment in the auto maker’s stock could tarnish the administration’s overall record in recovering crisis-era bailout money.
GM stock is down, but this might be enough to tick it up a penny. Baby steps.
It’s quite the Catch-22 (not for taxpayers though because we’ll probably lose no matter what), and I’m not sure which side to feel less sorry for. GM now wants to shed the “Government Motors” label they were thrilled to accept when it came attached to an enormous check, but the company will probably not recover as long as they’re lugging around a big inept tumor called the federal government that now comprises about a quarter of their total body weight. At the same time the Obama administration is in no way going to sell back the company any time soon and endure all the “taxpayers lose $15 billion on GM” headlines before the election — especially after everybody’s already been told all the bailout money has been recovered and the entire endeavor is a “success story.”
President Barack Obama on Thursday celebrated the return of a reborn General Motors to the U.S. stock market, saying it shows some of the “tough decisions that we made” during the financial crisis were beginning to pay off.
“American taxpayers are now positioned to recover more than my administration invested in GM, and that’s a good thing,” Obama said, speaking of the government’s $50 billion taxpayer-backed rescue of the venerable automaker.
My column today previews tonight’s DNC celebration of the massive redistribution of wealth from American taxpayers to…foreign auto plants and overseas auto workers. Tonight’s speakers will wrap the auto bailout in red, white, and blue. The antidote to their narrative-warping is for the GOP to amplify the voices of the victims of Obama/Big Labor cronyism and command-and-control market meddling: the Delphi workers, the bondholders, the dealers, the ripped-off taxpayers, and the rule of law. Seize the day, seize the narrative.
Obama’s (Un)American Auto Bailout
by Michelle Malkin Creators Syndicate
Copyright 2012
CHARLOTTE, N.C. — Cue “Fanfare for the Common Man” and rev up the Government Motors engines. Wednesday is Great American Auto Bailout Day at the Democratic National Convention. Party propagandists have prepared a prime-time-ready film touting the “rescue’s” benefits for American workers. UAW President Bob King will sing the savior-in-chief’s praises.
But like all of the economic success stories manufactured by the White House, the $85 billion government handout is a big fat farce.
“I said I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back,” Obama bragged on the campaign trail. Here’s the inconvenient story they won’t tell you:
GM is once again flirting with bankruptcy despite massive government purchases propping up its sales figures. GM stock is rock-bottom. Losses continue to be revised in the wrong direction. According to The Detroit News, “The Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That’s 15 percent higher than its previous forecast.”
The claims that GM paid back its taxpayer-funded loans “in full” — a story peddled in campaign ads narrated by Hollywood actor Tom Hanks — were debunked by the Treasury Department’s TARP watchdog this summer. GM still owes nearly $30 billion of the $50 billion it received, and its lending arm still owes nearly $15 billion of the more than $17 billion it received. Bailout watchdog Mark Modica of the National Legal and Policy Center adds: “In addition to U.S. taxpayers anteing up, Canada put in over $10 billion, and GM was relieved of about $28 billion of bondholder obligations as UAW claims were protected. That’s an improvement of almost $90 billion to the balance sheet, and the company still lags the competition.”
While the Obama administration wraps the auto bailout in red, white and blue, it’s foreign workers and overseas plants that are reaping redistributive rewards.
GM has increased its manufacturing capacity in China by an estimated 55 percent after the bailout, according to industry watchers. GM’s Dan Akerson crowed at the Beijing auto show earlier this year: “One of our aims is to help grow a new generation of automotive engineers, designers and leaders right here in China.” The U.S. auto giant’s ventures with the Communist regime include Shanghai OnStar Telematics Co., Ltd.; GM China Advanced Technical Center; FAW-GM Light Duty Commercial Vehicle Co., Ltd., in Harbin, Heilongjiang; FAW-GM’s Changchun plant in Changchun, Jilin; FAW-GM Hongta Yunnan Automobile Manufacturing Co., Ltd., in Qujing, Yunnan; and Shanghai Chengxin Used Car Operation and Management Co., Ltd.
“TARP successfully stabilized not only the banking industry but a number of other industries as well. The general view I would have is that history will be fairly kind to TARP,”Sterling Financial Corp. Chief Executive Greg Seibly said in an interview.
The Treasury Department this week announced that it expects to earn about $113.3 million in a public offering of the shares it holds in the Spokane, Wash.-based bank. Treasury also has received about $6.7 million in dividends from Sterling, and will get yet a little more back when it sells warrants it continues to own.
Still, it’s a steep discount and a clear net loss on the original investment of $303 million.
Overall, Treasury estimates that TARP will cost taxpayers $47.75 billion, largely due to expenses related to the auto bailout and housing programs.
TARP’s bank programs turned a profit, though Treasury is now selling off holdings in smaller banks at a discount. Sterling is the latest example. . . .
Is this really serious? The GM loss is dramatically underestimated by the TARP accounting methods. I suspect that bank losses are also underestimated for a similar reason. Total subsidies should be measured, not just TARP subsidies. In GM’s case, tens of billions of dollars given to the company raises the value of the stock and also gave it the money to pay off the loans that it had received. Those higher stock prices didn’t come free. In the case of banks, I suspect that all the subsidies given to the banks through the Fed were nontrivial and should also be counted.
My column today contrasts the phony Romney-killed-a-steelworker’s-wife fable from Obama’s sleazy SuperPAC with the actual stories of economic havoc that Obama’s union-pandering administration wrought on thousands of Delphi workers.
As long as Barack Obama insists on spinning fables about the auto bailout, I will continue to call attention to the forgotten victims and sacrificial lambs who got screwed. Yesterday’s UAW pep rally in Washington was another exercise in reality denial. I’ll say it again: The Right needs to forcefully counter the Obama machine’s Alinsky story-telling tactics. The leftists who claim to speak for hard-working people who play by the rules won’t put the names and faces and suffering of Obama’s jobs death toll victims front and center.
We must.
***
Meet the real workers Obama screwed over
by Michelle Malkin Creators Syndicate Copyright 2012
Chutzpah overload in full effect: President Obama’s sleazy super-PAC, run by his former White House spokesman Bill Burton, just released an ad accusing GOP presidential candidate Mitt Romney of causing the cancer death of a steelworker’s wife.
It’s not just a slanderous and false attack. It’s a foolish attempt to camouflage the administration’s massive jobs death toll, politicized pension plundering and Big Labor bailout cronyism. And it will backfire big time because the thousands and thousands of true victims of Obama’s economic wreckage are speaking up and fighting back.
Let’s dispense with the “Romney = murderer” meme first. The warped Priorities USA ad features the claims of one Joe Soptic, a former employee at the Kansas City-based GST Steel plant. The plant went bankrupt years after Bain Capital acquired it. Soptic blames Romney for the loss of his job and health insurance — and for the subsequent death of his wife a “short time after” the plant’s closure.
Obama flack turned super-PAC slime-master Burton shrugged off the facts and doubled down on the campaign’s class-warfare bloviation. “Families and individuals had to find new jobs, new sources of health insurance and a way to make up for the pensions they lost,” he told Politico. “Mitt Romney has had an enduring impact on the lives of thousands of men and women, and for many of them, that impact has been devastating.”
Yet, the Soptic story is the best they could scrape together? Stamp this one “EPIC FAIL.”
While Team Obama promotes fables to indict Romney, the incontrovertible stories of the current administration’s economic malpractice are finally getting out. In 2010, I first reported on how Obama’s UAW bailout threw tens of thousands of nonunion autoworkers under the bus. It’s the ongoing horror story of some 20,000 white-collar workers at Delphi, a leading auto parts company spun off from GM a decade ago.
As Washington rushed to nationalize the U.S. auto industry with $80 billion in taxpayer “rescue” funds and avoid contested court termination proceedings, the White House auto team and the Treasury Department schemed with Big Labor bosses to preserve UAW members’ costly pension funds by shafting their nonunion counterparts.
It appears that the Obama Administration and their democrat/Marxist fellow travelers will do or say anything to gain or maintain political power. But one must also question whether or not this effort extends to the manipulation of public financial indexes and reports published by federal agencies headed by hyper-partisan appointees?
How far will the Administration go to hid financial bad news relating to failed companies such as the defunct solar panel manufacturer Solyndra and other so-called green-initiative efforts that appear to destroy, rather than create jobs.
So I couldn’t help wondering about the headlines touting the increased vehicle sales at the partially-owned Government Motors (formerly General Motors before the Administration’s egregious disregard of established contract precedent involving bond holders.)
So while General Motors (still 32%-owned by the government) is reporting increased sales … we also find that government vehicle purchases may have substantially influenced the increase.
New York Daily News … “GM reported June US sales of 248,750 vehicles, up 16 percent from a year ago and the company’s highest monthly sales since September 2008.”
Detroit Free Press … “GM’s increase was helped by an increase in fleet sales. GM’s sales to fleet customers increased 36% in June while retail sales increased 7.9%.”
National Legal and Policy Center … “It looks like General Motors will be throwing everything in but the kitchen sink to help fluff its second quarter earnings numbers. Taxpayers continue to help with the cause as President Obama campaigns on the “success” of GM following the manipulated bankruptcy process that cost taxpayers $50 billion and another $45 billion of tax credits gifted to GM to help protect powerful UAW interests. We now learn that government purchases of GM vehicles rose a whopping 79% in June.”
“One of GM’s past tricks to help fudge earnings numbers has been to stuff truck inventory channels. Old habits die hard at GM. According to a Bloomberg report, “GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May.” 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers.”
It has been said by many that General Motors is no longer a car company – but a union pension fund driven by a subsidiary which happens to be a car company. Reminding me that “many a truth is spoken in jest.”
Bottom line …
There is little or no doubt in my mind that corrupt politicians are morally bankrupt and will do or say anything to gain or maintain power. Complete with knowingly aiding and abetting a public company, regulated under the Securities and Exchange Commission, to engage in Enron-style accounting that falsely portrays the company in the best light – possibly not for fraud, but for political purposes. And, one must ask, what happens when those vehicles shipped to dealers remain unsold? Is there a hidden buy-back agreement? With the government incentivize vehicle sales using taxpayer money? Can you even trust the Administration and their special interests in the critical political season?
2009: Bank of America Posts Losses, Gets $138 Billion Bailout
2012: Bank of America Pledges $50 Billion to Combat Climate Change
The next time BofA comes running to the government with their hands out I hope they’re denied on grounds that taxpayers fuming over this kind of thing causes global warming. Hopefully they’d at least appreciate the irony. I know I would.
For some other ridiculous stuff guaranteed to make you mad enough to punch Betty White, click here.
*****
Unrelated note: My wife’s having surgery today so blogging will be light if not nonexistent until tonight or tomorrow. This message was brought to you courtesy of the miracle of hospital waiting room WiFi.
I have been reporting to you about how President Obama’s UAW bailout threw tens of thousands of nonunion autoworkers under the bus since September 2010. It’s the real-life horror story of some 20,000 white-collar workers at Delphi, a leading auto parts company spun off from GM a decade ago. As Washington rushed to nationalize the U.S. auto industry with $80 billion in taxpayer “rescue” funds and avoid contested court termination proceedings, the White House auto team schemed with Big Labor bosses to preserve UAW members’ costly pension funds by shafting their nonunion counterparts. In addition, the nonunion pensioners lost all of their health and life insurance benefits. The abused workers — most from hard-hit northeast Ohio, Michigan and neighboring states — had devoted decades of their lives as secretaries, technicians, engineers and sales employees at Delphi/GM. Some workers have watched up to 70 percent of their pensions vanish.
It is important to keep telling the story of their continuing legal nightmare because the White House keeps telling fables about the “success” of the pro-worker auto bailout. The Delphi workers are fighting Chicago-style collusion and corruption. And their most recent court battle exposes, once again, the fantasy of Obama’s commitments to real fairness and transparency.
The latest from the Delphi Salaried Retirees Association:
Delphi Salaried Retirees Receive 62,000 Pages of Documents from Pension Benefit Guaranty Corporation in Lawsuit
Emails and reports finally released 20 months after federal judge first ordered PBGC to participate in lawsuit’s discovery phase. PBGC states it will produce a second batch of documents by end of June
Retirees believe Obama’s Auto Task Force directed PBGC to unjustifiably and illegally terminate pension plan in 2009
Government officials’ refusal to disclose how decision was made ignores Obama directive that “transparency and the rule of law will be the touchstones of this presidency.”
Release Date: Monday, June 11, 2012
WASHINGTON, D.C. — Twenty months after Federal U.S. District Judge Arthur Tarnow ordered in September 2010, that salaried retirees of auto parts maker Delphi Corp. were entitled to conduct discovery in their lawsuit against the Pension Benefit Guaranty Corporation, the PBGC on Thursday finally made its first document production, turning over approximately 62,000 pages of emails and documents. The pension agency said it would make a second production of a similar size by month’s end. The materials concern the PBGC’s 2009 termination of the pension plan of more than 20,000 current and future salaried Delphi retirees during the auto bailout, resulting in the reductions of earned pensions by as much as 70 percent.
“Given the president’s statement on his first day in office that ‘transparency and the rule of law will be the touchstones of this presidency, (see it at http://www.youtube.com/watch?v=72g7qmeP1dE), why did we have to pry this information out of a government agency led by an Obama appointee?” said Dennis Black, chairman of the Delphi Salaried Retirees Association (DSRA). “Our legal bills are several million dollars to get to this point.
If you invested more than $100 in a company, would you be happy if your shares were worth only $36? By anyone’s definition that investment would have been a terrible failure.
Yet, that is how the federal government’s investment in General Motors looks. The federal government has put in well over $100 billion into shoring up General Motors, but the entire company, not just what the government owns, was worth only $36 billion on Tuesday.
GM sales have bounced around, rising in March and then falling in April, but investors’ best guesses for what future sales will be are already in GM’s stock price. And surprisingly, a recent Rasmussen poll shows that support for the bailout has been rising and now 44 percent of likely voters say that the bailout was good for America.
The money the government spent adds up quickly: $50 billion in TARP bailout funds, a special exemption waiving payment of $45.4 billion in taxes on future profits, an exemption for all product liability on cars sold before the bailout, and $360 million in stimulus funds. Other money of which it is harder to quantify GM’s share includes the $15.2 billion Cash for Clunkers program and the $7,500 tax credit for those who buy the Chevy Volt. And all those costs don’t even include the billions taken from GM’s bondholders by the Obama administration. . . .
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