Archive for Bailout

The Only Problem With The Chevy Volt…

is that in a crash the batteries catch fire!

Federal officials say they are investigating the safety of lithium-ion battery in General Motors Co.’s Chevrolet Volt after a second battery fire following crash-testing of the electric car.

The National Highway Traffic Safety Administration said Friday that three Volt battery packs were crash-tested last week. In one instance, the battery caught fire afterward, and in another the battery emitted smoke and sparks.

Last May, a fire erupted in the battery of a Chevy Volt that had been damaged during a government crash test three weeks earlier. Last week’s tests were an attempt to replicate the May fire.

pinto.jpeg
The government has built us a brand new Pinto. :)

- Aggie

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Drs. No

They have the right prescription:

A new Rasmussen Reports national telephone survey shows that 57% of likely U.S. voters have more confidence in the judgment of a member of Congress who voted against bailouts than in the judgment of one who voted for them. Just 21% trust the judgment of a Congress member who voted for bailouts more. Another 22% are undecided.

Seventy-nine percent (79%) of Republicans and 62% of voters not affiliated with either of the major political parties trust a member of Congress who voted against bailouts more. Democratic voters are narrowly divided on the question.

Seventy-four percent (74%) of voters correctly identify Republicans as the political party some have labeled the Party of No. Despite, or perhaps because of, this high level of awareness, Republicans have built a solid lead over Democrats on the Generic Congressional Ballot.

We know what we have to do. It just remains to be seen if we have the sense to do it (in 6 1/2 months).

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Transparent as S**t

I mean that literally and figuratively:

We supported TARP to deal with toxic bank assets and resolve failing banks as a resolution agency of the kind that worked with savings and loans in the 1980s. Some taxpayer money was needed beyond what the FDIC’s shrinking insurance fund had available. But TARP quickly became a Treasury tool to save failing institutions without imposing discipline (Citigroup) and even to force public capital onto banks that didn’t need it. This stigmatized all banks as taxpayer supplicants and is now evolving into an excuse for the Federal Reserve to micromanage compensation.

TARP was then redirected well beyond the financial system into $80 billion in “investments” for auto companies. These may never be repaid but served as a lever to abuse creditors and favor auto unions. TARP also bought preferred stock in struggling insurers Lincoln and Hartford, though insurance companies are not subject to bank runs and pose no “systemic risk.” They erode slowly as customers stop renewing policies.

TARP also became another fund for Congress to pay off the already heavily subsidized housing industry by financing home mortgage modifications. Not one cent of the $50 billion in TARP funds earmarked to modify home mortgages will be returned to the Treasury, says the Congressional Budget Office.

As of the end of September, Mr. Geithner was sitting on $317 billion of uncommitted TARP funds, thanks in part to bank repayments. But this sum isn’t the limit of his check-writing ability. Treasury considers TARP a “revolving fund.” If taxpayers are ever paid back by AIG, GM, Chrysler, Citigroup and the rest, Treasury believes it has the authority to spend that returned money on new adventures in housing or other parts of the economy.

Treasury and the Fed would prefer to keep TARP as insurance in case the recovery falters and the banking system hits the skids again. But the more transparent way to address this risk is by buttressing the FDIC fund that insures bank deposits and resolves failing banks. The political class has twisted TARP into a fund to finance its pet programs and constituents, and the faster it fades away, the better for taxpayers and the financial system.

Amen to that. But this administration is not about using existing programs (FDIC, Medicaid); it’s about funneling hundreds of millions of dollars to favored industries and companies. And punishing the unfavored.

On a related note, I wonder if it’s just coincidence that the one automobile company that didn’t take a penny of bailout money is about to turn a profit?

Indeed, Ford has managed to gain momentum during this historic recession. It has distinguished itself as the American automaker that proudly passed on taxpayer assistance. Through the first half of the year, Ford even eked out a profit of $834 million, although much of that was because of special onetime charges.

During the past two weeks, at least three Wall Street analysts have raised their estimates for Ford Motor Co.’s third-quarter financial results, with one, JP Morgan’s Himanshu Patel, estimating that Ford would report a profit of 16 cents per share for the July-September period when it reports results next Monday.

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Homeless and Loving It!

I’m as happy for the obscene profits by Messrs. Goldman, Sachs, Morgan, and Chase as the average person, but if I may just point out a few counterexamples:

The number of U.S. households on the verge of losing their homes soared by nearly 15 percent in the first half of the year as more people lost their jobs and were unable to pay their monthly mortgage bills.

The mushrooming foreclosure crisis affected more than 1.5 million homes in the first six months of the year, according to a report released Thursday by foreclosure listing service RealtyTrac Inc.

The data show that, despite the Obama administration’s plan to encourage the lending industry to prevent foreclosures by handing out $50 billion in subsidies, America’s housing woes continue to spread. Experts don’t expect foreclosures to peak until the middle of next year.

Foreclosure filings rose more than 33 percent in June compared with the same month last year and were up nearly 5 percent from May, RealtyTrac said.

“Despite all the efforts to date, we clearly haven’t got a handle on how to address the situation,” said Rick Sharga, RealtyTrac’s senior vice president for marketing.

More than 336,000 households received at least one foreclosure-related notice in June, according to the foreclosure listing firm’s report. That works out to one in every 380 U.S. homes.

It was the fourth-straight month in which more than 300,000 households receiving a foreclosure filing, which includes default notices and several other legal notices that homeowners receive before they finally lose their homes. Banks repossessed more than 79,000 homes in June, up from about 65,000 a month earlier.

Wasn’t this among the first initiatives of the Obama administration, hence the one with the most time to take effect? What do you think, is F-minus too generous?

Also, how come the “experts” predict the foreclosures to increase for another year? What was this program for?

Related:

Redefault rates are near 50% after Fannie/Freddie loan modifications. Of course Fannie and Freddie can grant bigger loan mods (and probably will), but taxpayers will have to eat the cost.

Private loan modifications are redefaulting at a 58.1% rate 12 months after modification.

The best reaction to this dire news came from the brilliant investment advisor and blogger Michael Shedlock: “Can those people redeafulting can afford ANY payment? Even if they can the incentives to walk away are enormous.”

That’s the only positive side to this: all those deadbeat a**holes who voted for this un-American dictator will now be homeless and without a fixed address, hence unable to vote.

But they’ll have free health care, which they’ll treat with the same respect they treated their free homes.

BTW, I’m not against obscene corporate profits, if that’s what the market yields. But Obama rigged the market with the intention to punish big business and spread the wealth to freeloaders. So he’s either a liar (check) or an incompetent (check).

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Consistently Inconsistent

President Obama, March 30, 2009:

“These companies — and this industry — must ultimately stand on their own, not as wards of the state,” Obama said at the White House.

Obama spoke after the White House forced GM CEO and Chairman Rick Wagoner to step down. The president said the move was not a “condemnation” of the chairman — rather a “recognition that it will take a new vision and new direction to create the GM of the future.”

He said his interest lies in giving the company the opportunity to make “much-needed changes” so that it can emerge profitable and competitive.

“Let me be clear. The United States government has no interest in running GM. We have no intention of running GM,” Obama said.

President Obama, June 1, 2009:

President Barack Obama pushed General Motors Corp. into bankruptcy on Monday and said it was part of a “viable, achievable plan that will give this iconic company a chance to rise again.”

Obama said he hoped the firm would emerge quickly from bankruptcy court, and said the government was ready to commit an additional $30 billion to help the company get on its feet.

He said the government would own 60 percent of the new GM — much as it has taken part ownership of Chrysler, banks and other corporations in recent months — and acknowledged that could prove controversial with some.

Seeking to ease those concerns, Obama said, “What I am not doing, what I have no interest in doing, is running GM.”

Oh, I see. Entirely consistent.

So when I read… :

Obama sought to reassure Americans about the government’s role, saying the breathtaking plan – injecting a fresh $30.1 billion in loans to GM in return for a 60% stake and the right to reconfigure its board of directors – was the only way to ensure GM’s survival while protecting federal money.

I’m sure that’s also entirely consistent.

The consistency of slime.

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“I Won’t Have to Worry About Putting Gas in My Car. I Won’t Have to Worry About Paying My Mortgage.”

I don’t have the patience to go through the entire record, but all of President Obama’s frantic interventions in the market (and President Bush’s before him) haven’t amounted to much. The second major auto company teeters on the abyss of bankruptcy, banks and financial institutions are swamped and in danger of sinking, unemployment nationwide is expected to hit double-digits soon, deficits will soar to numbers never before imagined… and now this:

Modifying nontraditional mortgages will succeed for many, but most such modifications will end up in default within a year, a major ratings company predicts.

The Fitch Ratings study examined subprime mortgages, jumbo loans and little-documented home loans that Wall Street bundled to back mortgage bonds from 2005 through 2007. Those were the last years of the housing frenzy before delinquencies skyrocketed, home prices plummeted and investors’ appetite for such “private-label” securities evaporated.

In the study released Tuesday, Fitch projected that 55 to 65 percent of these loans being reworked to prevent foreclosures still may end up at least 60 days delinquent within 12 months.

For the subprime loans — the mortgages for the riskiest borrowers, with credit dings, bankruptcies and outsized debt loads — the projected 60-day delinquent rate was 65 to 75 percent.

Any wonder why Barney Frank has been absent from the airwaves lately?

If you’re already angry, trust me, you’re just getting started:

Fitch based its projection partly on “shrinking disposable income, escalating job losses and possibly some deceptive practices on the part of the borrowers themselves,” the New York company said.

The estimate comes as lenders and regulators, along with the Obama administration’s $75 billion Making Home Affordable program, step up efforts to modify mortgage terms to stem soaring foreclosures.

“Loan modifications hold clear value for many homeowners provided the modified payments are sustainable,” said Diane Pendley, a managing director at Fitch. “But more often than not, reducing the home payments to an affordable level may not be enough to rescue borrowers who are overextended on other credit and expenses.”

The study said borrowers who are current on their loans are angry that others who took on too much debt and missed payments are benefiting from lowered interest rates, extended terms and other modifications. There is also evidence that some able borrowers are choosing not to honor their obligations, the study said.

This is your government. This is your government under liberal management.

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Bankruptcy or Bust-Out?

What’s good for Chrysler is good for General Motors:

Surprising no one, General Motors announced Wednesday morning that its offer to exchange $27.2 billion of its bonds for a stake in a reorganized iteration of itself had expired, and had failed to garner enough interest from investors.

The announcement clears the path to a bankruptcy filing by the carmaker.

According to the terms of its reorganization plan, approved by the Treasury Department, G.M. needed a 90 percent acceptance rate from its tens of thousands of bondholders. In its statement, the company said the amount of bonds exchanged was “substantially less” than that.

G.M. added that its board would meet to discuss the company’s next steps.

The New York Times reported Tuesday afternoon that 70 percent of the newly reorganized G.M. would be owned by the federal government, with up to 20 percent going to the United Auto Workers union.

Bondholders had long opposed the debt exchange, going so far as to have proposed their own counter offer, which would have given them a 58 percent stake in a reorganized G.M. But the Treasury’s task force had determined that the bonds were “out of the money” and their debt was not worth that much.

At the core of bondholders’ arguments is that they are receiving worse treatment than the U.A.W., which is owed about $20 billion to a health care trust for the union’s retirees. Both groups hold what is known as unsecured debt, which is not backed by assets like plants or equipment.

“Our fundamental position is that equal groups in a creditor class should be treated equally,” Elliot Sloane, a spokesman for a committee of G.M.’s largest bondholders, told DealBook on Tuesday.

Give President Obama credit for not demonizing the “speculators” in GM debt as he did with Chrysler bondholders.

But let’s look at the last statement in the story and the math behind it:

The bondholders are owed $27.2 billion; the UAW is owed $20 billion.

Yet…

The bondholders are offered 10% of the company; the UAW 20%.

How is that not a payoff to the UAW for past services rendered?

Meanwhile, there is no more endangered species than a Republican Chrysler dealer.

They just interviewed a local Chrysler dealer on the radio who meets none of the criteria for shut-down. He’s above quota, he’s in a high-traffic area, he moves a lot of product. But he got the pink slip, without explanation. Then he got the letter from the Chrysler financing corporation saying that the $4 million in inventory he had rotting on the lot (who’s going to buy from him if he’s not going to be around to service it?) was still his responsibility, and to expect a lien.

He’s a registered Democrat, btw, but he did not vote for or contribute to Obama.

I’ve said it before, I’ll say it again. Tony Soprano was never so ruthless.

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Driving While Republican

Like texting or intoxication, they don’t mix:

To quickly review the situation, I took all dealer owners whose names appeared more than once in the list. And, of those who contributed to political campaigns, every single one had donated almost exclusively to GOP candidates. While this isn’t an exhaustive review, it does have some ominous implications if it can be verified.

Could be that dealers, being entrepreneurs, trend heavily Republican anyway. Without some kind of control sample, there’s no way to judge if this is corrupt or just representative.

“It really wasn’t Chrysler’s decision. They are under enormous pressure from the President’s automotive task force.”

He added the government task force, which he criticized for having no members with retail experience was, in effect, attacking U.S. entrepreneurs…

“I think it’s unconstitutional,” said Jim Anderer, owner of Island Jeep in Lindenhurst, New York.

“The Fifth Amendment clearly states you cannot take another person’s property without due process or compensation. Even in eminent domain, there is an appraised price on the property being taken by the state.”

As Allahpundit observes, it could be coincidence that the dealers in question trend Republican. But the story is consistent with what I’ve heard locally: profitable dealers are have been targeted for shut-down, and no one can figure out why.

We’ll have to ask President Mugabe—sorry, Obama. Honest mistake.

Has Jonah Goldberg been informed?

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Deadbeats With Plastic

You can fall delinquent on your mortgage and get bailed out. Now, the same goes for your credit card.

Can the Chew and Screw bailout bill be far behind?

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”…

The industry says that the proposals will force banks to issue fewer credit cards at greater cost to the current cardholders.

Oh, why the hell not? Want me to wax your car while I’m at it? Grab you a beer and some chips? Fluff your pillow?

These a-holes in government make me nostalgic for bankruptcy.

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Joe the Shakedown Artist

I don’t think I’ve read a better summation of the President’s shakedown of the moneymen (“speculators” he called them) who hold Chrysler’s debt:

The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him.

Let’s also mention only in passing the irony of this same President begging hedge funds to borrow more to purchase other troubled securities. That he expects them to do so when he has already shown what happens if they ask for their money to be repaid fairly would be amusing if not so dangerous.

That’s indisputable. The numbers I’ve read suggest that the investors, who hold 30% of the company, had been asked (asked my ass—told, even threatened, is closer to the mark) to take scant pennies on the dollar (they offered to “compromise 50% of their first-lien position to help support the rehabilitation of Chrysler”, says their lawyer), while the United Auto Workers, which held a 10% stake, is to be given 55% of the company in exchange for a few concessions.

But it gets even better:

Last but not least, the President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large. Find me a hedge fund that has been bailed out. Find me a hedge fund, even a failed one, that has asked for one. In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying. The TARP recipients had no choice but to go along. The hedge funds were singled out only because they are unpopular, not because they behaved any differently from any other ethical manager of other people’s money. The President’s comments here are backwards and libelous. Yet, somehow I don’t think the hedge funds will be following ACORN’s lead and trucking in a bunch of paid professional protestors soon. Hedge funds really need a community organizer.

OH! That’s going to leave a mark.

This is America. We have a free enterprise system that has worked spectacularly for us for two hundred plus years. When it fails it fixes itself. Most importantly, it is not an owned lackey of the oval office to be scolded for disobedience by the President.

I am ready for my “personalized” tax rate now.

Who is this, Joe the Hedge Fund Manager?

Let us recall how candidate Obama spoke of hedge funds—versus how he acted:

Obama’s corporate-bashing rhetoric should, of course, come as no shock. During the campaign and continuing through his first 100 days, he has routinely attacked the “ethic of greed.” When Sen. John McCain publicized Obama’s wealth redistribution comments to Joe the Plumber, Obama snarked that McCain was “fighting for Joe The Hedge Fund Manager” and was “in cahoots with Joe the CEO.” First Lady Michelle Obama also singled out hedge fund managers for scorn, urging young people to turn away from unrewarding work on Wall Street for more fulfilling jobs in the “helping industry.”

But behind the public lashings, the Obamas were all too happy to pass the plate around the pews of the Church of “Greed.” According to the Center for Responsive Politics, hedge funds and private equity firms donated $2,992,456 to the Obama campaign in the 2008 cycle. Obama, vocal critic of the campaign finance practice known as “bundling,” accepted more than $200,000 in bundled contributions from billionaire hedge-fund manager James Torrey, more than $100,000 in bundled contributions from billionaire hedge-fund manager Paul Tudor Jones and more than $50,000 in bundled contributions from billionaire hedge-fund manager Kenneth C. Griffin, chief executive officer of Citadel Investment Group in Chicago.

No less than 100 Obama bundlers are investment CEOs and brokers: nearly two dozen work for financial giants such as Lehman Brothers, Goldman Sachs or Citigroup.

Somehow, “President” doesn’t feel like the right title for Obama. First Community Organizer is better. Or Shakedown Artist in Chief.

Jesse Jackson muttered those notorious words: “Barack… I want to cut his nuts off.” But I think Obama is the one wielding the rusty blade: he’s taken Jackson’s PUSH extortion tactics to a national scale.

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Ba-Racketeer Obama Rides Again

We’ve already reported (and had confirmed) that President Obama “negotiated” with Chrysler’s creditors the way Tony Soprano would “negotiate” with a deadbeat better: by means of a lead pipe.

But it turns out there are debts he’s willing to forgive: those to you and me.

Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.

This revelation was buried within Chrysler’s bankruptcy filings last week and confirmed by the Obama administration Tuesday. The filings included a list of business assumptions from one of the company’s key financial advisors in the bankruptcy case.

“The reality now is that the face value [of the $4 billion bridge loan] will be written off in the bankruptcy process,” said the official, who added that the 8% equity stake that Treasury will be receiving as part of the company’s reorganization is meant to compensate taxpayers for the lost money.

“While we do not expect a recovery of these funds, we are comfortable that in the totality of the arrangement, the Treasury and the American taxpayer are being fairly compensated,” said the official.

First, what value will we see for our money? Any? What will the American People get out of Chrysler, particularly when President Neophyte will be able to dictate the types of cars Chrysler can and can’t make, burying lines that make $$$ and forcing them to make cars that people, even Climahysterics, don’t want?

Second

According to the filing, the company’s financial advisor also foresees the need for an additional $1.5 billion loan from the Treasury Department by June 30, 2010.

We’re going to write off something like $8.5 billion in return for a chump stake in a chump company? I don’t know about you, but I could use the 28 bucks out of my pocket that represents—to pay for gas that has crept back up above $2 a gallon.

The president gets all Godfather on the hedge fund presidents, yet turns into Grandpa Walton when the money is ours. Somebody check the Constitution to see whom he works for. I’m not sure anymore.

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Ba-Racket Obama Revisited

How dishonest is President Obama?

Lawyers are more trustworthy, that’s how:

Business Insider reports that more than one Chrysler senior creditor has corroborated Thomas Lauria’s allegation that the Obama administration threatened them with public attacks if they didn’t surrender their contractual rights. One of their sources says that the Obama team comprises some of the worst “ends justify the means” people he’s ever encountered:

Creditors to Chrysler describe negotiations with the company and the Obama administration as “a farce,” saying the administration was bent on forcing their hands using hardball tactics and threats.

Conversations with administration officials left them expecting that they would be politically targeted, two participants in the negotiations said. …

The sources, who represent creditors to Chrysler, say were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person said described the administration as the most shocking “end justifies the means” group they have ever encountered. Another characterized Obama was “the most dangerous smooth talker on the planet- and I knew Kissinger.” Both were voters for Obama in the last election.

One participant in negotiations said that the administration’s tactic was to present what one described as a “madman theory of the presidency” in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.

I don’t think Obama is crazy; I think his ideology is mad. When we covered this the other day, I expected the later details to soften the edges of the story. Turns out, they’re sharper than ever.

Get this: he growls like a Doberman at American business executives, yet genuflects before Saudi royalty like a submissive cur.

I do not like him Sam-I-am.

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