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. Ralph Nader, through his group, Public Citizen, organized the event. Speakers included the shareholders’ lawyer, former Solicitor General Theodore Olson. Anyone concerned over the future of property rights in this country should be following this case.
The Washington, D.C.-based Federal National Mortgage Association (“Fannie Mae”) and the … Read More ➡
General Motors recently recalled close to a million vehicles for a deadly problem that resulted in six deaths. The models involved were Chevy Cobalts and Pontiac G5s from the 2005 through 2007 model years. The question is, why did NHTSA and GM wait so long to recall vehicles with a dangerous defect when the problems surfaced years ago?
Scouring the internet reveals many reported stalling incidents for the models in question. My particular Google search went back to 2009 and unearthed disturbing evidence that GM did not properly address issues with faulty vehicles. While the vehicles were manufactured by the “old” version of GM, “new” GM certainly would have been aware of the problems as far back as 2009. Following is an exchange from a forum that ran during the 2009 time period. A poster named Matt eerily references the problem on a Chevy Cobalt chat room on February … Read More ➡
General Motors continues to find innovative ways to make political points while losing market value. The company continues its heavy ad spending, this time at the Olympics. The marketing wizards at GM are trying to tap into the LGBT consumer market, which equals approximately 3.5% of the total population. At the same time, GM shares are getting hit once again as higher inventory levels are leading to heavy discounting. The company still looks a lot like Government Motors.
The main problem for GM regarding inventories centers on the very important (and most profitable) truck segment. The WSJ reported that truck discounts are growing as a result of a 151 day supply of Chevy Silverados and a 131 day supply of GMC Sierras. A 60 day supply is considered to be ideal in the auto industry. GM has had a history of stuffing inventory channels to prop up revenue. Revenue is … Read More ➡
General Motors announced disappointing earnings results today and issued a warning that first quarter results will underwhelm as well. The reasons behind the earnings’ miss are surely going to be explained away by pundits and proponents of the company still known as Government Motors to many. Sorting through the smoke and mirrors can lead to some important and simple explanations as to what is going on at GM.
Before looking at the reasons why GM has drastically underperformed the broader markets since the Obama-orchestrated bankruptcy process of 2009, let’s take a look at one of the most critical takeaways from the latest earnings announcement. GM is now approaching pre-bankruptcy debt levels with over $36 billion in short and long term debt. The company issued $28 billion of new debt with $20.2 billion of that going to pay down existing debt.
What’s that you say? You thought GM had a … Read More ➡
Senator Robert Menendez (D-NJ) disclosed on Friday that he accepted a third flight on a jet owned by Dr. Salomon Melgen, his largest donor, who is apparently under investigation for Medicare fraud. Last year, when Menendez was forced to admit to that he accepted two flights from Melgen, his office asserted that there were no more flights. Menendez’ failure to reimburse Melgen was characterized as an “oversight,” the same term his office used in reference to the first two flights.
Menendez also disclosed that he has paid more than $400,000 in legal fees associated with investigation of his relationship with Melgen. In 2012, Melgen contributed $700,000 to a super PAC affiliated with Senate Majority Leader Harry Reid (D-NV) that spent the bulk of the funds for Menendez’ re-election.
Based on information provided by NLPC, the New York Times reported on February 1, 2013 that Menendez went to bat for a … Read More ➡
General Motors shares are dropping again today as January sales figures disappointed Wall Street. Sales for the month fell 11.9% from a year ago with weakness across the board. The news follows last week’s announcement that GM has now dropped to number three in global sales, being surpassed by both Toyota and Volkswagen.
The bad news at GM comes amidst continued political hype for the company. GM CEO, Mary Barra was a guest of honor at President Obama’s State of the Union address last week. Ms. Barra may want to start focusing on the continuing problems at GM instead of politics. Her Obama-appointed predecessors had maintained a strategy that was more concerned with appearances and political correctness than on profitability and sales growth, which has led to the company losing market share both domestically and globally.
GM’s news release for January’s poor sales performance had the same old flavor. … Read More ➡
The Obama Administration may have sold the last of the taxpayers’ shares in General Motors, but it appears that politics will continue to play a powerful role in the management of the company. New GM CEO Mary Barra did not seem too concerned about appearances when she attended the State of the Union as Obama’s guest. Her predecessor Dan Akerson in previous months had gone to great lengths to distance GM from the federal government.
With President Obama praising Ms. Barra in front of the nation, the field is once again set for GM to take the stage during upcoming elections. Democratic presidential hopeful Hillary Clinton also jumped on the bandwagon, giving kudos to both Ms. Barra and the auto bailouts in general when she spoke at a recent car convention. The political attention given to the appointment of a female CEO leads to the question that no … Read More ➡
General Motors is now approaching its fifth year of existence since emerging as a new entity as a result of the 2009 auto bailouts which saw taxpayers fund a bankruptcy process to the tune of $50 billion. Much has been debated about the “success” of GM since the controversial government-orchestrated restructuring. While GM management recently announced a dividend in an attempt to ensure investors of financial stability, a more telling indicator of the likelihood of future profitability may be found through an analysis of how competitive the company’s vehicles are.
Let’s face it; it should not be that hard for a corporation to look good to Wall Street after receiving an influx of $50 billion to its balance sheet along with the removal of creditor liabilities. But just how well are the company’s cars selling and what is the prognosis for longer-term sustainability? A closer look at the best-selling, mid-size … Read More ➡
New York TV station NBC 4 reported today that the federal criminal probe of New Jersey Senator Robert Menendez is expanding:
The Department of Justice is investigating Menendez’s efforts on behalf of two fugitive bankers from Ecuador, multiple current and former U.S, officials tell NBC 4 New York. The probe into Menendez’s dealing with the bankers comes as federal authorities are also investigating his relationship to a big campaign donor from Florida.
The donor is Salomon Melgen, Menendez’ largest contributor. In 2012, Melgen contributed $700,000 to a super PAC affiliated with Senate Majority Leader Harry Reid (D-NV) that spent the bulk of the funds for Menendez’ re-election. The report notes:
Federal investigators have searched Dr. Melgen’s offices twice in connection with an $8 million Medicare billing dispute. Separately, they are looking into whether Sen. Menendez improperly advocated for the doctor in that dispute. They are also looking into whether the
… Read More ➡
The internet was ablaze Tuesday evening with stories presenting a perceived positive move by General Motors’ outgoing government-appointed management. All hail! “General Motors to pay first dividend since 2008,” trumpeted the headlines. GM shares immediately spiked up in after-hours trading with shares rising about $1.60 or 4% on the news. Unfortunately for those duped by the proclamation, GM followed the story hours later with a profit warning. For the time being, the bad news outweighed the good with GM shares reversing course and ending the day Wednesday with a loss of over one and a half percent on a day that the market rallied.
So, let’s ask the questions mainstream journalists won’t. Why in the world would GM announce a dividend (subsequently hurting investors who buy on the news) hours before giving negative guidance? Why was this decision and announcement made by outgoing management just days before new CEO, Mary … Read More ➡