SIGTARP: Excessive Pay at Bailed-Out GM

GM money bagsA special inspector general report on compensation for executives at General Motors and Ally Financial blasts the Treasury Department for allowing excessive pay at the companies as taxpayers lost billions of dollars on the auto bailouts. The watchdog group issuing the report monitors the Troubled Asset Relief Program (TARP), which was set up to save financial corporations deemed “too big to fail” due to systemic risk to America’s financial system. The program was expanded to allow for the bailing out of the auto industry, despite the questionable use of funds specifically designated for financial institutions.

A NY Times piece states that the report criticizes the Treasury Department for loosening restrictions on TARP program pay limitations as follows:

Top executives at General Motors and Ally Financial, both of which received bailouts from the United States Treasury Department in 2009, were paid excessively even as taxpayers lost money, according to a special

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Does NHTSA Protect the Public, or GM and UAW?

David FriedmanThe National Highway Traffic Safety Administration (NHTSA) faced some of its heaviest criticism to date last week on Capitol Hill. Hearings addressing the failings of the agency were headed by Senator Claire McCaskill and centered around NHTSA’s part in General Motors’ deadly ignition switch recall delay. The death toll (currently at 20) continues to rise as a result of GM and NHTSA allowing the dangerously defective vehicles to remain on the roads for about 10 years from when the problem was first recognized. While the criticism of NHTSA is well-deserved, it is past time for harsh words to be accompanied by an overhaul of the agency.

Senator McCaskill has stated that an overhaul is exactly what she intends to accomplish according to a NY Times report on the hearings. From that piece:

In an interview after the hearing, Ms. McCaskill vowed to continue working on legislation to overhaul the

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Obama Silent on Chrysler Tax Inversion Deal

Obama at ChryslerIt’s official. Chrysler has now completely merged with Italian auto maker, Fiat. It had taken a bit over five years for Fiat to gain total control of the bailed out, once-American Chrysler Corporation. Back in June of 2009, President Obama gifted (payment was made in the form of “technology”) an initial 20% stake in Chrysler to Fiat as part of his orchestrated auto bailout process. Fiat parlayed that into full ownership and is now showing its gratitude to the American taxpayers who helped fund the deal by relocating Chrysler’s headquarters to London; a move which will lessen the company’s corporate tax rate.

While the Obama Administration has been quite vocal in condemning such deals (known as tax inversion deals) which lower corporations’ US tax bills, not much has been said when the companies involved are linked to cronies of the Administration. Obama friend, Warren Buffett, financed … Read More ➡

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6 Month GM Recall Tally – 34% Fixed, $3.4 Billion in Expenses

GM recall logoIt has now been over six months since General Motors finally recalled vehicles with a known deadly ignition switch defect. The defect was attributed with being the cause of accidents that resulted in at least 13 deaths. The Wall Street Journal now reports that only 34% of the recalled vehicles have been fixed.

GM has taken $3.4 billion in charges and losses on the past two earnings’ reports for all of their recalls, despite the fact that most of the recalled vehicles have yet to be repaired. The most questionable part of GM’s charges come from the first quarter’s earnings’ report.

In April of this year, GM took a $1.3 billion recall-related charge for the quarter ending March 31st. Repairs on recalled GM vehicles for the ignition switch defect began in April of this year. According to GM’s earnings’ release, the $1.3 billion charge was “for recall costs in … Read More ➡

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GM Admits Original Corroding Brake Lines were Lower Quality than Replacements

rusted GM brake linewGeneral Motors continues to deny that it has a safety problem with brake lines that are prone to corrosion in as few as five or six years. Thousands of owners of GM trucks and SUVs have complained of failing brakes due to brake lines bursting from the rust problem. One of these owners, Joe Palumbo from Pennsylvania, has made it a quest (see his website here) to expose the safety defect, thus far to little avail. GM’s latest response to Mr. Palumbo includes an implied admission that the company has been using inferior quality brake lines in its vehicles.

The response to Mr. Palumbo’s complaint of prematurely corroding brake lines came in the form of an email on August 6th of this year from [email protected]. Drew, a “Chevrolet Executive Assistant,” responded to the complaint regarding Mr. Palumbo’s 2004 Chevy Avalanche, which had brake failure after just … Read More ➡

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Another GM Unresolved Recall Problem – Trucks with ABS Defect

GM ABS brakeGeneral Motors has yet another unresolved safety concern with its vehicles. This one involves trucks with anti-lock braking system (ABS) problems. The ABS in some GM trucks engages at slow speeds in dry conditions, leading to a loss of braking and increased stopping distances. Once again, this is a known problem at GM, as they have recalled vehicles previously from earlier model years with the same problem.

A search on the National Highway Traffic Safety Administration (NHTSA) website finds hundreds of complaints from owners of GM trucks, model years 2003 to 2008, who experienced loss of braking from inadvertent ABS activation. The root of this problem is not hard to discover; GM recalled earlier model years of the same vehicles that experienced the same problems back in 2005. The plot thickens when considering the known cause, which was brake line corrosion; a problem we at NLPC have been trying to get … Read More ➡

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Chevy Volt Resale Values Plunge as Lease Returns Hit Market

Mary Barra and VoltIt has been two years since General Motors admitted that there was little demand for the Chevy Volt (as reported here) due to there being “no plug-in market.” Their answer was to “create market” to drive sales for the politically popular but economically-nonviable Volt. GM manipulated sales for the Volt through the use of subsidized leases at a time when President Obama’s favorite, green wonder-car was being criticized for low sales as it failed to live up to the early hype.

GM was able to use taxpayer money in the form of electric vehicle tax credits to help drive down costs to lessees. Taxpayers chipped in $7,500 for each Chevy Volt placed on the road for terms as low as two years. The taxpayer subsidies, along with inflated residual values and other GM incentives, provided for low monthly lease payments and led to a full two-thirds of all Volt “sales” … Read More ➡

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How GM Manipulated June Sales Figures with Dealership Incentives

chart downThe Associated Press gives evidence today to how desperate General Motors is to give the appearance that the company is firing on all cylinders. GM pulled out all the stops to ensure that June sales would not disappoint when sales were slowing as a result of the company’s loss of credibility during its seemingly never-ending recall saga.

At mid-June, sales for the month at GM were lagging the previous year’s. The political minds at GM could not have this, and according to the piece:

In mid-June, however, the automaker was headed for a year-over-year monthly sales decline, according to data compiled by automotive research firms. Then, on June 20, GM asked dealers to buy more cars, and it threw in another $1,000 in discounts per vehicle, five dealership representatives told The Associated Press. The company finished the month with a 1 percent gain.

The dealers said they were asked to

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GM Debt Climbs to Over $40 Billion, Earnings Disappoint

General Motors reported earnings today for the 2nd quarter of 2014. The early prognosis is not good with share price falling after the report. While it is difficult for the Mom and Pop investor to sort through GM’s myriad of charges, special items and various smoke and mirrors, there are some key take-aways that give a glimpse of GM’s financial health. Primarily, debt continues to grow at the company, now exceeding $40 billion while earnings are propped up by special items.

Analyzing the levels of cash compared to debt at GM is probably the easiest way to get to the truth behind the many numbers thrown about in the earnings report. In just the past three months at GM, short and long term debt has grown from a hefty $37.8 billion to an even heftier $40 billion. This key fact gives a contrarian view to what the media and … Read More ➡

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Why Hasn’t NHTSA Expanded GM Brake Line Corrosion Investigation?

FriedmanIt has now been over two months since we requested that General Motors recall vehicles that are prone to brake line corrosion. The vehicles in question, GM truck model years 1999 through 2003, have been under investigation by the National Highway Traffic Safety Administration (NHTSA) since 2010. The government agency has done nothing noteworthy regarding the existing GM safety concern over the four year span of the investigation.

NHTSA has also proven its ineffectiveness when it comes to safeguarding American motorists by ignoring multiple complaints for newer model GM vehicles. Why hasn’t NHTSA expanded the GM brake line investigation to include model years 2004 through 2007, which also have hundreds of complaints involving failed braking as a result of brake line rust?

Owners of GM vehicles with corroded brake lines have been frustratingly trying to bring to light an issue which plagues GM vehicles more so than any other manufacturer.Read More ➡

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