Ex-Car Czar Acknowledges GM Problems


Appearing today on CNBC, Steven Rattner, the former head of President Obama’s auto task force, made some surprising observations that undermine his previously articulated optimism about the future of bailed-out General Motors. Although he cleverly tried to lump Ford in with GM, he acknowledged GM’s recent reliance on incentives to sell autos:

And you now have in the marketplace a fear that GM is pushing the incentives a little too much in January and February. And nobody wants to go back to the old ways of doing business.

The only problem is that GM has done exactly that by offering 0%, 72-month loans on some models. As I detailed last week, GM much-ballyhooed sales increases were goosed by the most generous incentive offers in the industry, some $3,700 per car sold.

Rattner also addressed the resignation of GM’s CFO Chris Liddell last week:

…you have this change in CFO at

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Boehm Takes Aim at Legal Services Corporation in National Law Journal Interview

Boehm testifyingFrom today’s National Law Journal by Tony Mauro:

Kenneth Boehm, chairman of the National Legal and Policy Center in Falls Church, Va., was once a senior official of the Legal Services Corp., serving as counsel to its board of directors from 1991 to 1994.

Since then, Boehm has been one of the LSC’s most persistent critics, urging reform and even elimination of the agency. Last year he testified before the House Judiciary Committee, asking members to reject a bill that would have, in his view, eliminated many of the beneficial reforms Congress enacted in 1996. He warned that if the bill passed, “once again Legal Services will be known as a federal program plagued with unaccountability and controversy.” The bill died.

Earlier this month Boehm spoke with the The National Law Journal to discuss LSC and proposals to cut its budget.

Q: What is your current assessment of the Legal Read More ➡

Rangel Claims United States is ‘Not Broke’

Pete Kasperowicz of The Hill reported yesterday:

Rep. Charles Rangel (D-NY) on Wednesday said the federal government is not broke, and that Congress should not begin cutting programs in the way that Republicans have proposed.

“Make no mistake about it, we’re not broke,” Rangel said in a floor discussion with Rep. John Garamendi (D-Calif.) “It wasn’t that we overcompensated public employees. They didn’t cause this deficit.”

Of course, if you really believe that the country is not broke in the face of a $14 Trillion national debt, and a deficit of $1.3 Trillion this year alone, you probably don’t believe that you have to pay taxes, either. Maybe that explains why Rangel was so indignant when we forced him to admit that he failed to disclose or report rental income from his Dominican Republic beach house.

The financial crisis of 2008 shook the confidence of middle-class taxpayers in their … Read More ➡

Consumers Reject Chevy Volt

Part 4: GM by the Numbers

Last week, the Volt, GM’s signature hybrid vehicle, turned in a lackluster performance in its first series of road tests by Consumer Reports.  CR told Reuters on Monday that “when you look at the finances, [the Volt] doesn’t make any sense.”  The publication went on to note that the Volt was “not particularly efficient as an electric vehicle and not particularly good as a gas vehicle… This is going to be a tough sell to the average consumer.”

GM and the Feds are betting the farm – and their credibility – on the Volt.  As Truth About Cars editor Edward Niedermeyer wrote last year in the New York Times, the history of the Volt was never about making a “best in class” green vehicle, it was always about making the bailout look palatable – whatever the cost.  And according to Niedermeyer, it’s … Read More ➡

GM Gooses Sales With Incentives

Part 3: GM by the Numbersincentive chart

Famed investor Warren Buffett once said, “If you have to have a prayer session before raising prices by ten percent, then you’ve got a terrible business.” So, what does it mean if your business is slashing prices month over month through discounts and other incentives? Take a look at this graph.

From GM’s IPO last November through February, the incentives and discounts the company is offering to consumers have increased from 29.8% above the industry average to more than 50% above industry average according to Edmunds.com.

What this means is simple: Yes, GM can crow about its 46% sales surge in February, as it did last week.  But what they aren’t telling you is they are offering discounts and incentives 50% higher than the industry average helping to inflate their numbers, and that these discounts have grown by leaps and bounds every month … Read More ➡

GM Boosts Lobbying; Hires Bailout Specialists

GM lobbying chartPart 2: GM by the Numbers

From the 1st quarter through the 4th quarter of 2010, GM’s lobbying expenses more than doubled from $1.8 million to $3.89 million – a 113% increase.  After all, when the government is your largest shareholder, your company execs will inevitably be spending an inordinate amount of time cozying up to Washington politicians.

Moreover, GM’s lobbyist team reads like a who’s who of the government bailout business.  And why wouldn’t it? When you’re lobbying Washington to privatize gains for your clients and socialize their losses among taxpayers, you hire those firms with the most experience representing other notorious companies that received massive bailouts by U.S. taxpayers – Fannie Mae, Freddie Mac, Goldman Sachs, AIG and others.

GM’s Lobbying Bench – Reported income from other government bailout recipients

The Duberstein Group: $600,000 in lobbying for Fannie Mae and $2.3 million for Goldman Sachs

Dutko Worldwide: Read More ➡

GM Shares Will Likely Never Break Even for Taxpayers

Part 1: GM by the NumbersGM chart

News coverage of General Motors over the past few weeks has painted an increasingly glowing picture, but here’s a dose of reality:  GM still has not repaid taxpayers for the bailout and it’s looking less and less like taxpayers will ever be made whole.

Unlike much of the media, we actually spent a considerable amount of time looking behind the press releases to see what GM’s numbers really say about the health of a company taxpayers now own. This week, we will be sharing with readers a more realistic picture of the company’s health.  The bottom line:  The picture is far less rosy than GM would like you to believe.

GM’s Share Price:  Will taxpayers ever be made whole?

Remember these promises?

“Recent progress at GM gives reason for optimism that it may be possible for taxpayers to get every penny back.” Steve Read More ➡

Rangel Embarrasses Himself in Court Appearance on Behalf of Gang Member

According to a report by Irene Cornell of WCBS radio in New York City:

Congressman Charlie Rangel basically embarrassed himself by showing up in court plead for the release of 17 year-old Afrika Owes, a one-time student at the Deerfield Academy in Massachusetts.

Rangel kept popping up, standing at the rail, trying to interrupt the judge. Finally, a court officer told him to sit down three times when he popped up again.

Judge Edward McLaughlin responded by saying, “I see someone standing who should not be standing, unless you have a bad back like I do.” Rangel sat down.

Why was Rangel so passionate about springing Ms. Owes? According to a separate WCBS report:

Owes, 17, had been a student at the prestigious Deerfield Academy in Massachusetts. Prosecutors say she was also a member of a drug gang that terrorized 137th Street in Harlem.

Owes was one of fourteen

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Flaherty: Either Bust the Unions or Bust the Country

NPR logoA brief comment of mine was included today in a report by Peter Overby on National Public Radio’s All Things Considered. Here’s a transcript:

The fight over public employee unions has exploded into a high-stakes partisan war. In Wisconsin and several other states, Republicans want to end collective bargaining with many public employee unions. Two favorite proposals would disrupt the ability of unions to build their political funds. And that would deal a major blow to the Democratic Party.

In a fireside chat last month on television, Wisconsin’s Republican Gov. Scott Walker said his proposal is all about fiscal policy.

“It certainly isn’t a battle with unions,” he said. “If it was, we would have eliminated collective bargaining entirely, or we would have gone after the private sector unions.”

But on Wednesday, the Republican National Committee threw that argument out the window with a television ad airing in Wisconsin. According … Read More ➡

BP Co-Owns Gulf Well That Got Deepwater Permit

Deepwater HorizonEarlier today I accused Interior Secretary Ken Salazar of a “cynical” approach to issuing deepwater drilling permits for the Gulf of Mexico. I did not realize how right I was. According to Kristen Hays of Reuters:

BP Plc, whose Macondo well blowout in the Gulf of Mexico caused the worst offshore oil spill in U.S. history last year, co-owns the well that was granted the first deepwater drilling permit since the disaster.

BP is Noble Energy Inc’s partner in the well, holding a 46.5 percent interest, BP said.

Noble operates the Santiago well that received a permit from U.S. regulators on Monday to resume drilling in the Mississippi Canyon area of the Gulf, about 70 miles (110 km) south of the Louisiana coast.

I pointed out that the moratorium was a policy response by officials like Salazar who were hostile to deepwater drilling even before the BP disaster. His department’s … Read More ➡

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