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.
It appears that General Motors is trying to remedy one of the latest criticisms against them. That criticism is that the company has way too large a “cash hoard” and most recently came from former Obama Auto Task Force member turned shareholder activist, Harry Wilson. Well Harry, be at ease; GM has managed to reduce that so-called hoard by over $3 billion in just three months as first quarter earnings flopped on Wall Street.
The death toll for General Motors' faulty ignition switch victims continues to rise with the last reported number being 42. There has been speculation that the death count is significantly higher, as safety advocate Clarence Ditlow has written to GM to request an expansion of efforts to uncover victims of accidents resulting from defective GM vehicles.
The evidence continues to mount that General Motors has been less than transparent, if not outright culpable, regarding its ignition switch recall fiasco. As the death toll mounts (from the original 13 casualties reported by GM to the just revised 32 deaths) for victims involved in crashes of GM vehicles with defective ignition switches, new evidence has emerged that GM actually ordered replacement parts for the defective switches a full two months before they even reported a problem.
A special inspector general report on compensation for executives at General Motors and Ally Financial blasts the Treasury Department for allowing excessive pay at the companies as taxpayers lost billions of dollars on the auto bailouts. The watchdog group issuing the report monitors the Troubled Asset Relief Program (TARP), which was set up to save financial corporations deemed "too big to fail" due to systemic risk to America's financial system. The program was expanded to allow for the bailing out of the auto industry, despite the questionable use of funds specifically designated for financial institutions.
It's official. Chrysler has now completely merged with Italian auto maker, Fiat. It had taken a bit over five years for Fiat to gain total control of the bailed out, once-American Chrysler Corporation. Back in June of 2009, President Obama gifted (payment was made in the form of "technology") an initial 20% stake in Chrysler to Fiat as part of his orchestrated auto bailout process. Fiat parlayed that into full ownership and is now showing its gratitude to the American taxpayers who helped fund the deal by relocating Chrysler's headquarters to London; a move which will lessen the company's corporate tax rate.
Fannie Mae and Freddie Mac formally are known as Government-Sponsored Enterprises, or GSEs. These days the "S" might stand for "stolen." A group of their shareholders are arguing as much in federal court in Perry Capital v. Lew. The U.S. Treasury Department, claim the plaintiffs, overstepped its authority by impounding profits in perpetuity through its "sweep" rule of 2012. On Wednesday, February 5, the group, Shareholder Respect, held a conference in Washington, D.C. to highlight its view that the rule violates the terms of the temporary conservatorship under which Fannie Mae and Freddie Mac have been forced to operate since 2008.
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.
For years the Obama Administration maintained that they had no significant involvement in the day to day operations at General Motors as the company was guided through a taxpayer-funded bankruptcy process. A report from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) now sheds light on the process and confirms that the Administration did, in fact, drive decisions at GM. One such decision saw GM provide taxpayer funds to "top-off" pensions for politically-favored UAW retirees at Delphi while non-union retirees lost the majority of their benefits. Treasury officials previously denied any involvement in the actions.