It may turn out to be a very expensive mistake. On May 1, President Obama nominated 11-term Rep. Mel Watt, D-N.C. (in photo), to head the Federal Housing Finance Agency, established in July 2008 to oversee troubled mortgage giants Fannie Mae and Freddie Mac. Watt has a history of making racially-charged statements that are way over the line, even by debased "civil rights" standards. The two federally-chartered, publicly-traded companies, operating under government conservatorship for almost as long as FHFA has been around, own or guarantee well over $5 trillion in home mortgages.
General Motors has announced a $4,000 rebate (or $3,000 and a four year, zero interest loan from government-owned Ally Financial) on the slow-selling Chevy Volt. The company had a choice regarding how to deal with an excess supply of Volts that is growing faster than demand. GM could have, once again, temporarily halted production until inventory (currently at about a 6 month supply) came down to reasonable levels. It instead chooses to lose more millions of dollars by spending on incentives designed to manufacture demand that otherwise is practically nonexistent.
It looks like the Obama Administration and the UAW are again working hand in hand as the two entities are coordinating on an offering of a total of 50 million General Motors shares. Treasury is planning on selling 30 million shares as the UAW's VEBA (Voluntary Employee Beneficiary Association) Trust will sell 20 million shares. The VEBA Trust was formed to cover retiree's medical benefits for the UAW and received about a 17.5% ownership stake in GM as part of the 2009 bankruptcy process.
The housing market has been on a roll this past year. Prices are rising; vacancy rates are falling; and homeowners are spending small fortunes on upgrading properties. In this context, a White House initiative, the Home Affordable Modification Program, or HAMP, launched in 2009 to reduce mortgage payments for millions of owners at risk of foreclosure, appears downright irrelevant. But Obama Treasury Secretary Jack Lew announced this morning that his boss will extend the program for two years beyond its scheduled December 31, 2013 expiration date for new applicants.
The IRS scandal that revealed targeting of conservative groups by the Treasury Department has reopened speculation that the Obama-orchestrated auto bailouts unfairly targeted Republican-leaning dealerships for closure. Republican Congressmen Mike Kelly (PA) and Jim Renacci (OH) have penned a letter to Treasury Secretary Jack Lew requesting documentation so that an investigation can determine what criteria was used to shutter dealers that appear to have had one thing in common: their political affiliations.
College loan debt has become a red-flag issue rivaling that of home mortgage debt a half-decade ago. Ironically, the White House, like Congress, in the haste to avert disaster, might create it. President Obama's Fiscal Year 2014 budget includes a plan to expand participation in the Income-Based Repayment program, which is designed to assist eligible persons going through a partial financial hardship to stay current on federal student loans. At present, the program forgives outstanding debt for borrowers who make 20 years of timely payments - 10 years if they work in the public or nonprofit sector. But eligibility is limited to borrowers approved since October 2007. The Obama plan would extend forgiveness to those who took out loans before that. And it would render debt tax-exempt. It's a sweet deal - except to taxpayers.
A recent search for new Chevy Volts on cars.com unearthed 9,254 vehicles currently at dealerships for sale. There were another 258 late-model, used Volts available. About half of those had less than 5,000 miles on them. Considering the abysmal sales rate for the self-proclaimed electric wonder-car (1,306 in April for those keeping track), the unofficial inventory numbers point to about a seven month supply of Volts available. Ideal inventory levels are considered to be in the two month range. It may be near time for General Motors to halt production, yet again, for the floundering Volt.
Great news for consumers who are considering buying General Motors' green wonder car, the Chevy Volt. I know how excited those environmentally conscientious Volt enthusiasts can get, but a little patience can pay off big time if potential buyers hold off for a year or so on their purchase. According to GM CEO Dan Akerson and following another dismal month of Volt sales (1,306 in April), the car that defies logic will soon be available for up to $10,000 less money. The good news extends to shareholders of GM as the next generation of the Volt will supposedly be profitable for the company. So, as we say prepare to say goodbye to the current generation of the obsolescent Volt, let's take a trip down memory lane to review how past promises for the car panned out.
Earlier this year, I reviewed General Motors' first quarter earnings report and annual results. My take-away from the report was that GM relied upon shady accounting techniques and a build-up of US dealer inventories to produce some rosy-looking results. Channel stuffing to the tune of an over 20% increase in inventory from year end 2011 provided for GM's revenue growth. The trend continues as GM has further pumped-up inventory for quarter one.