I made these remarks today at the National Press Club in Washington, DC before the luncheon speech of outgoing General Motors CEO Dan Akerson:
President Obama justified the auto bailout by predicting it would make money for the taxpayer. With Treasury now selling its remaining shares, the direct loss is about $10 billion. So on its most fundamental level, the auto bailout is a failure.
But that $10 billion figure dramatically understates the true cost. There were separate multibillion dollar bailouts of Ally Financial, formerly know as GMAC, and Delphi and other suppliers. There was cash for clunkers, the government guarantee of warrantees, accelerated fleet purchases, etc., etc.
Treasury also allowed a novel application of the tax-loss carryforward provisions of the tax code during the GM bankruptcy, shielding $30-$40 billion in GM profits from taxation.
In addition to all these costs, the bailout probably ensures future bailout costs when GM … Read More ➡
Peter Flaherty, president of the National Legal and Policy Center (NLPC), today posed key questions to the General Motors leadership at a National Press Club press conference, including whether the company will repay to taxpayers the $10 billion direct cost of the GM bailout.
News that the U.S. Treasury Department has sold its remaining stake and that Mary Barra will take over as GM’s new CEO have put the spotlight on the company and its future. GM executives have pointed to GM’s $26.8 billion in cash as evidence of its improved financial position. Analysts have raised the possibility that the company will buy back shares or institute a dividend.
Questions for GM:
1) Will GM compensate taxpayers for the $10 billion loss they have taken on their involuntary “investment” in the company?
2) If not, why should taxpayers take a loss now on their GM “investment” when the company allegedly … Read More ➡
Thirteen of Fisker Automotive executives made more than six figures in the past year, despite manufacturing zero cars.
The news was first reported Wednesday afternoon on the automotive Web site Jalopnik.com, and later in the evening by the Delaware Journal. Jalopnik often gets the scoops when electric cars catch fire. For those unaware of the ugly saga, Fisker declared bankruptcy at the end of last month after squandering more than $1.4 billion in private investment and losing $139 million of taxpayers’ money.
According to news reports, including one from the Journal a year ago, not a single Fisker Karma – the $102,000 (base price) luxury electric plug-in embraced by the likes of Leonardo DiCaprio and Al Gore – has been produced since July 2012. Hopeful workers in Wilmington, Del. –where company officials and local politicians loudly announced the revival of a former General Motors plant for the … Read More ➡
General Motors has announced that Mary Barra will be replacing Dan Akerson as CEO as of mid-January. Ms. Barra was previously the head of global product development. As such, she already has to take partial responsibility for the over-hyped and low-selling Chevy Volt along with the upcoming Cadillac version of the car. With Consumer Reports now stating that the new Cadillac ELR (a glorified Chevy Volt) gave them “sticker shock,” will the ELR be the first major embarrassment for Ms. Barra?
Anyone who has followed the Chevy Volt story could have guessed at what the prospects for a gussied up and rebadged Cadillac version of the car, for over twice the price, would be. The vehicle may well be GM’s worst idea in history. I can not imagine what the motivation for GM to manufacture such a car might be. The decision to produce the car should scare the bejeezus … Read More ➡
I will hold a press conference on Monday, December 16 at 11:00am to pose key questions to General Motors leadership, including whether and when the company will repay to taxpayers the $10 billion direct cost of the auto bailout.
News that the U.S. Treasury Department has sold its remaining financial stake and that Mary Barra will take over as GM’s new CEO have put the spotlight on the company and its future. GM executives have pointed to the company’s gigantic cash position as evidence of its improved finances. Analysts have raised the possibility that the company will buy back shares or institute a dividend.
The NLPC press event will precede current Chairman and CEO Dan Akerson’s scheduled luncheon to present an update on the company’s progress before a National Press Club audience in Washington, DC.
NLPC has been a persistent critic of the auto bailout. NLPC Associate Fellow Mark Modica, … Read More ➡
Friday’s announcement by the Obama administration that it will allow wind energy companies to kill certain bird species for 30 years without legal ramifications shows that its $1 million paltry fine of Duke Energy for avian slayings a week earlier was just for show.
Slamming the president for the application of double standards, not enforcing laws it doesn’t like, and acting unilaterally without Congressional authority is nothing new. It’s not often, though, you see such an obvious policy contradiction appear within such a short period of time. And now, without need to worry about re-election, he can pit his environmental constituencies against each other (wildlife protection vs. green energy promotion).
The latest decision, by the U.S. Fish and Wildlife Service, extends the maximum possible term for permits to “take” (“molest or disturb”… “take, possess, sell, purchase, barter, offer to sell, purchase or barter, transport, export or import…”) from … Read More ➡
One of the major architects of the General Motors bankruptcy process, Harry Wilson, recently gave a very optimistic outlook for GM future share price. Mr. Wilson was a member of President Obama’s Auto Task Force, and was an instrumental player in seeing that UAW interests were put ahead of other creditors, like old GM bondholders.
Automotive News now reports that Mr. Wilson feels that GM may be a target for activists because of their “huge” cash hoard. According to the piece:
“Any company that isn’t efficient about capital allocation is a target for activists,” said Wilson, who is now a restructuring adviser at Maeva Group LLC in Westchester, N.Y. “GM has a huge cash hoard and they are generating lots more cash each year, so they need to be thoughtful about that.”
The problem with Mr. Wilson’s statement regarding GM’s balance sheet improving is that it just isn’t true. The … Read More ➡
Following incidents in Washington state, Mexico and Tennessee, the National Highway Traffic Safety Administration announced it would probe fires that occurred recently over a six week period in Tesla Motors’ electric Model S.
And this week, as revealed in a Detroit News story, the NHTSA looks like they’re serious – at least more serious than Germany’s transportation safety authority.
Why bring up Germany? Because as the regulatory heat bears down in the U.S. on Tesla and high-profile CEO Elon Musk, they have trotted out the Eastern Europe nation to demonstrate that they’ve been absolved of any culpability in the fires. The media that has mostly fawned over the electric automaker helpfully amplified the development, which certainly Musk welcomed. He even got a slight recovery in the company stock price as a result.
On Monday Tesla posted a press release that claimed the company received an inquiry … Read More ➡
Last week’s punishment/settlement between the Department of Justice and Duke Energy over bird deaths caused by its wind turbines gives evidence that the Obama administration needed a scapegoat, to defuse accusations that it applies a double-standard in enforcement of wildlife laws.
The Friday before Thanksgiving both parties announced that Duke would pay $1 million for the deaths of more than 160 birds that are protected by the Migratory Bird Treaty Act. The incidents occurred over the last four years at two Wyoming sites operated by the utility’s Duke Energy Renewables subsidiary.
“This case represents the first criminal conviction under the Migratory Bird Treaty Act for unlawful avian takings at wind projects,” said Robert Dreher, acting assistant attorney general for the Justice Department’s Environment and Natural Resources Division, in a statement.
That’s nice. The problem is the timing of the action coincided with a response by the Justice Department to Republican … Read More ➡
After three recent fires, Tesla Motors CEO Elon Musk said he asked the National Highway Traffic Safety Administration to investigate its Model S.
NHTSA said no he didn’t.
Tesla has been saying it received the highest safety rating in the U.S., a “new combined record of 5.4 stars.”
NHTSA says there’s no such thing.
Musk said he expects the investigation will clear Tesla after incidents in which metal objects struck the underside where the Model S battery is located.
NHTSA says we’ll see, and a decision whether there should be a recall will likely take months. Maybe a lie detector test needs to be part of the study.
Musk thought he had averted scrutiny after the first fire in Washington state last month, when NHTSA declined to investigate the cause. Then another fire followed a collision in Mexico, and another blaze ignited in Tennessee a couple weeks … Read More ➡