Did GM Get Sweetheart Deal on Homeland Security Vehicles?

A report by the Office of the Inspector General (OIG) for the Department of Homeland Security has found that the Department’s Federal Protective Service (FPS) division wasted about $2.5 million of taxpayer money in 2014 on an extravagant fleet vehicle program. It is not surprising that images show that the vehicles in question appear to be manufactured by crony company, General Motors.

Teamsters Central States Pension Fund Puts PBGC in Jeopardy

Decades ago, the Teamsters’ Central States Pension Fund was a project of organized crime.  In the future, it may well be a project of Pension Benefit Guaranty Corporation, the federal agency that insures pension plans against insolvency.  Ironically, this could put PBGC itself at risk.  This September, the troubled fund, which enrolls over 400,000 active and retired union members in 37 states, filed a restructuring plan with the Treasury Department proposing benefit cuts of nearly 23 percent.  The action is the first under a new law.  Central States Executive Director-General Counsel Thomas Nyhan explains:  “The longer we wait to act, the larger the benefit reductions will have to be.”  Yet the union, with help from Congress, helped bring about this dilemma.

Will Underfunded VEBA Fund Enter Into GM’s UAW Negotiations?

The Wall Street Journal has reported that the UAW’s voluntary employees’ beneficiary association (VEBA) fund was underfunded by approximately $20.7 billion in 2014, which was the latest reported period. The shortfall has grown from the previously reported 2013 figure when the trust was estimated to be 93% funded. The latest funding figure, which was hurt by growing medical benefits costs, plummeted to 74% in one year.

Congress Says 'No' to Fannie Mae/Freddie Mac CEO Pay Hike; Misses Big Picture

If there is an issue that has united popular indignation, Left and Right alike, executive compensation surely ranks near or at the top.  But the bipartisan opposition to recent pay increases for the CEOs of mortgage conduits Fannie Mae and Freddie Mac, while highly understandable, misses the larger point.  Several months ago, these companies, which account for nearly half the outstanding home mortgage debt in the U.S. and which since 2008 have been wards of the government, announced plans to raise annual CEO pay from $600,000 to $4 million.  Their overseer, the Federal Housing Finance Agency, approved the hikes.  In response, Congress overwhelmingly has passed (or is on the verge of passing) bills to roll them back.  Lawmakers would do better to allow the firms to operate freely and without subsidies.

Barra’s Rosy Proclamations Should Embolden UAW

General Motors’ CEO, Mary Barra, continued to project a bright future for the automaker during a recent presentation to shareholders. The prognostication gave a rosy appraisement for financial estimates as far out as 2020, when Barra says GM will have between $9 billion to $10 billion in free cash flow. Her crystal ball also shows that electric cars will compete with gas-powered vehicles by 2022 and that global car sales will increase by 50% to 130 million by the year 2030.

No Justice for General Motors’ Victims

The response of the Justice Department to General Motors’ ignition switch defect cover-up was announced last week. GM’s failure to address the deadly defect led to the loss of lives of at least 169 people. Any hopes for the families of the victims that the crony status of GM would not stand in the way of justice were squashed as the company was given a slap on the wrist by its friends at the Obama Administration.

GM Should Listen to Marchionne's Pitch

Fiat Chrysler Automobiles’ CEO Sergio Marchionne’s quest to merge his company with General Motors continues to garner attention and draw suggestions that GM might be shooting itself in the foot by ignoring the offer to talk. Two respected sources weighed in on the drama, most notably CNBC anchor and ex-hedge fund manager Jim Cramer who has lost confidence in GM management and dumped his shares of the company.

Buicks Made in China - More Bad GM Timing

Rumors have circulated that General Motors is considering building Buick SUVs in China which would be sold both there and in the USA. The timing of the leaked plans could not be worse as China markets continue to collapse, spreading contagion to world markets. The timing also coincides with GM’s negotiations with the UAW, raising the suspicion that GM is using the rumor to leverage their bargaining power with the UAW.

Why is GM focusing so much on the Chinese market at the worst of times? Regardless of the weakening Chinese economy, it would be challenging to convince American consumers to purchase SUVs built in China given the perception of lower quality and safety standards. China also has not been the best of US allies considering ongoing computer hacking allegations, aggressive military build-ups and unfair currency devaluation tactics.

What was the Point of GM Share Buyback?

General Motors’ shares have taken a hit this week with the catalyst for the latest downturn being news out of China. Continued weakness in China (including weakening car sales) has led the country to devalue its currency in an attempt to bolster its economy at the expense of its trading partners. This latest news confirms my views that GM’s China gamble puts the company and its shareholders at increased risk. The horrible performance of GM’s stock over the past few months also brings into question the rationale for the much-hyped share buyback that was instigated by ex-Obama Auto Task Force member, Harry Wilson, in photo.

Puerto Rican Bond Default Raises Likelihood of U.S. Bailout

Observers lately have taken to calling Puerto Rico “America’s Greece.”  That might qualify as an insult – to Greece.  And the American public may have to cover the debts.  On Monday, the island government announced that its Public Finance Corporation was unable to make its full scheduled loan payments over the weekend.  The $628,000 in disbursements was a mere blip on the $58 million due, itself a blip on composite debt of over $70 billion, all of it rated at or near “junk” levels.  Yet suddenly the specter of collapse has become real.  Moody's Vice President Emily Raimes, terming the partial payment a “default,” stated:  “This event is consistent with our belief that Puerto Rico does not have the resources to make all of its forthcoming debt payments.  This is a first in what we believe will be broad default on commonwealth debt.”

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