Bailed-Out Ally Financial Unit Comes Full Circle Back to GM

Ally financial girlThe final pieces are coming together in the General Motors’ restructuring puzzle as the company has, not surprisingly, won its bid to repurchase government-owned Ally Financial’s European and Latin American lending operations. GM was forced to spin off all but 10% of Ally Financial back when it was known as GMAC.

Back in late 2008, the spigots of taxpayer money were open and GM had its cup out. In order for GM’s lending arm (GMAC) to receive TARP funds, GM had to divest all but less than 10% of the company so that GMAC could be granted status as a bank holding company. Under President Bush’s watch, the Federal Reserve approved the move and the company that is now known as Ally Financial eventually received about $17 billion of taxpayer money. GM itself would eventually end up with about $50 billion of taxpayer money, mostly distributed during Obama’s term.

In … Read More ➡

FHA Faces $16.3 Billion Deficit; May Need Bailout Next Year

fha-logoBy any number of indicators, the nation’s housing market is in recovery. But that may be the last thing the Federal Housing Administration (FHA) wants to hear right now. Last Friday, the mortgage insurance agency, part of the U.S. Department of Housing and Urban Development, announced the results of an independent annual audit projecting that reserves of FHA’s main fund, as of September 30, were $16.3 billion less than its obligations for the current operating year. The estimate, far more grim than what had been forecast only months earlier, has renewed debate in Washington and elsewhere as to the need for a special infusion of funds – i.e., a bailout. It would be the first in the agency’s 75-plus years. What should be debated is whether FHA even should exist as a government entity or at the very least whether it should operate on the scale that it has during … Read More ➡

Payouts to Bankrupt A123 Systems Likely to Continue

A123 logoA reply by stimulus recipient ($115 million of a $249 million grant paid out) A123 Systems to an inquiry by Republican Sens. Charles Grassley (Iowa) and John Thune (S.D.) showed the electric vehicle battery manufacturer received nearly $1 million in Recovery Act funds on the day it declared bankruptcy.

The money flow is not likely to stop.

A123 as a whole, or in pieces, is going to be sold to the court-approved buyer(s). That is likely to be either Johnson Controls, which is the lead bidder for the company’s automotive business, or Wanxiang Group, which wants to buy the whole company. A123 had an agreement to transfer up to 80 percent of the company’s ownership to the China-based automotive parts manufacturer over the summer, but its bankruptcy filing on Oct. 16 – with Johnson Controls as the new automotive assets purchaser – nullified its agreement with Wanxiang.

But … Read More ➡

Fisker’s Big Fundraiser is Going Out of Business

Fisker logoThe venture finance operation that raised money for crony capitalist investors Kleiner, Perkins, Caufield and Byers, and their green tech firms like electric car company Fisker Automotive ($193 million paid in stimulus loan guarantees) and fuel cell manufacturer Bloom Energy, is shutting down, according to a Fortune report.

Advanced Equities, Inc. had recently been reprimanded by the Securities and Exchange Commission and by the Financial Industry Regulatory Authority (FINRA) for misleading investors and for breach of contract with its brokers. Fortune cited sources that said AEI brokers were told last week that Monday would be their last day. Crain’s Chicago Business confirmed that AEI was shutting down its broker-dealer business following its regulatory troubles, which “made it difficult to run the business.”

The co-founders of the Chicago-based firm, Dwight Badger and Keith Daubenspeck, received a sharp reprimand and severe fines from the SEC in September for delivering … Read More ➡

A123’s Executives Get Their Richly Undeserved Bonuses

A123 logoPresident Obama’s penchant for flushing taxpayer money down the green energy toilet lives at least another four years, and his crony supporters continue to benefit.

The latest example is the pending sell-off of assets by bankrupt A123 Systems, which was awarded upward of $279 million in stimulus funds, plus other assorted government grants and contracts. The top executives who presided over its failure – and supported the president’s cap-and-tax initiatives early in his term – are likely to receive millions of dollars in bonuses, thanks to their scheming earlier this year and a bankruptcy court judge.

Associated Press reported that that judge, Kevin Carey, ruled on Thursday that the electric vehicle battery maker can proceed with the bankruptcy process after a break-up fee – as part of a deal for Johnson Controls to buy its automotive assets – was lowered. Had a deal not been consummated, Johnson could … Read More ➡

Bad Election Day for Lawmakers in Ethics Trouble

Shelley BerkleyEric Lipton of the New York Times had a round up on Friday of the election-day fortunes of members of Congress in ethics trouble.  According to the article:

In races around the country, an unusually large number of lawmakers facing charges of wrongdoing were unceremoniously ousted from their jobs on Tuesday – which is quite rare, because more than 90 percent of the incumbents seeking re-election to Congress typically return for another term.

Perhaps Democrats and Republicans can agree that this is good news. The biggest example was Rep. Shelley Berkley (D-NV), who failed in her attempt to move up to the Senate, even though Obama carried Nevada. She was defeated by Sen. Dean Heller (R-NV), who was already in the Senate after have been appointed after John Ensign resigned.

From the article:

Ken Boehm, co-founder of the National Legal and Policy Center, a Virginia-based group that has

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Did Taxpayers Fund Obama Reelection Through Auto Bailout?

Obama and MarchionneIt is being suggested that President Obama’s reelection was at least in part helped by the auto industry bailouts, or more accurately, the portrayal of the bailouts by the president and the media. It is therefore important to surmise that the precedent setting auto bankruptcy proceedings saw billions of taxpayer dollars used to not only help the industry, but to fund the reelection of the sitting president that orchestrated the process.

The greatest travesty of the 2012 election campaign may have been that the auto bailouts were never properly debated. The main point should not have been whether or not the government should have been involved in helping the industry, but whether the process was carried out in the fairest manner with the least amount of taxpayer dollars put at risk. Even though the auto bailouts were unpopular with most Americans, the Romney team seemed to want to avoid … Read More ➡

How Healthy is Auto Industry? – American Suzuki Goes Bankrupt

SuzukiNow that the election season is coming to an end, we may get a clearer picture in the near future as to just how “healthy” the auto industry really is. Another car company has just filed for bankruptcy as American Suzuki announced that it is filing for chapter 11 protection and will no longer be selling vehicles in America.

I’m sure few tears will be shed for American Suzuki and the workers at American Suzuki car dealerships that will lose their jobs. The company is a wholly-owned subsidiary of Japanese-owned Suzuki and the vehicles are built outside of America.

The more important takeaway from the bankruptcy filing is that the auto industry remains as competitive as ever, and those automakers that are not at the top of their game (or receive billions of taxpayer dollars to keep them afloat) will have trouble being profitable in the tough environment; despite the … Read More ➡

VIDEO: Romney is Right About Jeep Production in China

NLPC Associate Fellow Mark Modica was a guest Wednesday night on Fox Business Network’s Willis Report. Here’s a transcript:

Gerri Willis: Tonight growing concerns that many US manufacturing jobs are at stake.  Take a look at this Romney campaign ad slamming President Obama.

Romney Ad:  Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China.  Mitt Romney will fight for every American job.

Gerri Willis:  And the left came out swinging today claiming that the ad is inaccurate including Joe Biden who today called it quote flagrantly dishonest.  But my next guest says Romney has it right. Here to explain is Mark Modica, Associate Fellow for the National Legal and Policy Center.  Great to have you back Mark.

Mark Modica:  Hi Gerri.

Gerri Willis:  Always a pleasure … Read More ➡

Fact Checking Romney and GM on Job Creation Claims

General Motors is criticizing Mitt Romney for running an ad that says GM cut 15,000 jobs under the Obama Administration. The Detroit Free Press reported that GM spokesman Greg Martin (speaking about the Romney ad) stated, “No amount of campaign politics at its cynical worst will diminish our record of creating jobs in the U.S. and repatriating profits back to this country.”

Leaving aside for a moment the bigger issue of a taxpayer-supported entity improperly inserting itself in an election, lets examine the facts. A look at GM’s annual SEC filings gives a clear picture of how many people were employed by the company both before and after the Obama Administration guided the company through a bankruptcy process.

At the beginning of 2009, GM employed 91,000 workers in the US. GM filed for bankruptcy in June of 2009 and received about $50 billion from taxpayers to help it through the … Read More ➡

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