Ally Financial seldom gets mentioned when the auto bailouts are discussed. The company was formerly known as GMAC and the 17 billion dollars that taxpayers sunk into the company was crucial for the perceived success at both General Motors and Chrysler. We now learn that Ally Financial has failed a government stress test and, according to Reuters, “fared by far the worst of 19 banks examined.”
Years back, GMAC changed its name to Ally Financial to dissociate itself from GM. The auto lender also managed to change its status to bank holding company and GM sold most of its ownership stake so that TARP money could be accessed by the newly named Ally Financial. Just changing a name can not negate the fact that the $17,000,000,000 Ally Financial received from taxpayers went towards helping GM (as well as Chrysler) which received about $50,000,000,000 in bailout funds. According to the … Read More ➡
Fresh off the heels of its European Car of the Year award, the Chevy Volt has been named “Vincentric Best Value in America.” You just can’t make this stuff up. I didn’t know that there were so many awards in the auto industry, but the less that the Volt sells, the more awards it seems to win. After this latest award, it dawned on me that the Chevy Volt is eerily like Wilbur, the prize-winning pig from the classic children’s tale, Charlotte’s Web.
Wilbur was a runt of a pig, destined to go to the slaughter house. He is befriended by Charlotte A. Cavitica, a spider who realizes Wilbur’s days are numbered if she can not promote enough hype to save the pig. Charlotte spins her web in eloquent fashion above Wilbur’s pen. She spells out accolades describing Wilbur, starting with “some pig.” The hype builds as the desperation to … Read More ➡
Anyone following the Chevy Volt story has seen the internet headlines trumpeting the blog by General Motors’ Bob Lutz in which he blasts Bill O’Reilly, Fox News and what he calls, “the rabid, sadly misinformed right.” It remains a mystery as to why GM would take a political stance, and seek to identify with one ideological faction over another. It’s ridiculous to blame poor Volt sales on a Republican conspiracy. It is also pretty stupid. After all, some of the people who buy cars are Republicans.
Before moving on to the Lutz offensive defense, let’s review the facts. Sales for the much-hyped Chevy Volt have never materialized. Prior to the ridiculous misdirection play by GM and Lutz (yes, he is a paid consultant for GM) that sees Fox News and Rush Limbaugh being vilified for criticizing the Volt, the excuse for the low sales was that supply could … Read More ➡
NLPC Associate Fellow Fred N. Sauer asserts that General Electric is no longer a great industrial company, but is now dominated by its General Electric Capital Services (GECS) division. Contrary to the conventional wisdom of the financial media that GECS has been GE’s strength in recent years, Sauer argues that GECS is dangerously reliant on short-term financing to support its own lending. The result is a company ultimately dependent on political influence to mitigate the risk, creating opportunities for the well connected, like Warren Buffett.
Click here to download an 18-page pdf version of the Report.
The role of CEO Jeffrey Immelt is explored and unfavorably contrasted to that of Jack Welch, his predecessor. Sauer charges that GE’s executives have put increasing their own compensation above the interests of shareholders- and taxpayers.
… Read More ➡
The recent lowering of lease costs for the Chevy Volt led me to think about the amount of money General Motors or Ally Financial (also taxpayer-owned) was going to lose when the quickly depreciating leased vehicles begin to be returned. I then recognized another egregious waste of taxpayer money being spent to support the struggling car. Taxpayers are paying the tax credits, which go to the lessor of the Volt (most likely Ally Financial), to place Volts on the road for a limited period of time.
The typical Chevy Volt lease will be for a term of 36 months. The federal tax credit is $7,500. The Volt has an electric range equivalent to about one gallon of gas per charge. During the course of the Volt lease, the lessee can save about 1,000 gallons of fuel compared to owners of fuel-efficient, gas powered vehicles that cost half the price. So, … Read More ➡
These guys at Government Motors just continue to outdo themselves. Just as Chevy Volt owners are getting over being called idiots by the head of Audi, GM comes up with an ad that lends credence to the accusation. A supposed Volt owner tells how she loves her car because her friends think it looks like a spaceship and it saves a “crapload” of money.
I laid off the original story of the Audi head saying Volts were for idiots. The .001 percenters who bought Volts have a right to spend their money as they see fit and I gave them the benefit of the doubt (given their higher income) that they were as intelligent as the rest of us average folks. The newest GM ad does more to insult Volt owners’ intelligence than the idiots comment. It’s not just the use of the word “crapload;” in fact the words “load” … Read More ➡
Last week NLPC reported that an international law firm, whose employees provided significant campaign support for President Obama, was paid $1.8 million from the stimulus to review and conduct “due diligence” for the Department of Energy’s suspended loan to Fisker Automotive, an electric vehicle start-up company. Fisker sent 65 workers to the unemployment lines.
Debevoise and Plimpton, which employs top Obama bundler and fundraiser David Rivkin, wasn’t the only largely Democratic law firm to reap such rewards. At least four other major law practices also analyzed DOE’s loan programs and its grantees – three of which gave large sums of money to the campaigns of President Obama and fellow Democrats.
Debevoise, on the heels of $199,944 in donations to Sen. Barack Obama for his 2008 presidential campaign, was able to land the contract to analyze loans from DOE’s Advanced Technology Vehicles Manufacturing Loan Program to troubled Fisker … Read More ➡
The Detroit News reports that Mitt Romney wants a reexamination of the General Motors’ bankruptcy proceedings. Mr. Romney is quoted as stating, “I think it’s important for us to go back and look at what happened and take apart this bankruptcy process. See to what extent the finger of politics was placed on the scales of justice and see if we can’t be more fair to the people involved in this process.” I agree with the sentiment, but I do have to ask, where were the Republicans on this issue over two years ago?
Three years ago I served with a group called the Main Street Bondholders who went to Washington to present the case of individual bondholders who were discriminated against throughout the GM bankruptcy process. Most members were retired senior citizens who were not amongst the top 1% of income earners in the US and relied upon income … Read More ➡
The taxpayer-funded ($279 million) battery supplier that gave big raises and parachutes to its executives shortly after it cut “Green jobs” at its Michigan factories, reported last week it would suffer big losses again for 2011.
A123 Systems, whose fortunes were entwined with those of electric vehicle startup manufacturer Fisker Automotive, also announced it would look to China and India in order to survive.
A123 also received grants and tax credits from Michigan that could total more than $135 million.
The company said it would realize a loss of $257.7 million for last year, compared to the $152.6 million in losses for 2010. A123, which received a $249.1 million grant from the Department of Energy to refurbish plants in Livonia and Romulus, Mich. (plus another $30 million sub-grant for another energy storage project), has never been profitable.
A123 is an investor in Fisker, which had its own $529 … Read More ➡
In administrating its stimulus-fed loan and grants programs, the Department of Energy has been accused of incompetence, carelessness, recklessness, and cronyism. Now it can add inconsistency to those distinguishing characteristics.
Last week Bright Automotive, an electric vehicle start-up company that General Motors helped two years ago with an investment of at least $5 million from its venture capital arm, gave up hope on winning a $450 million loan from DOE’s Advanced Technology Vehicle Manufacturing program. As the company announced the withdrawal of its loan application and that it would end operations, CEO Reuben Munger and COO Mike Donoughe sent (and released to the media) a letter to DOE Secretary Steven Chu that sharply criticized the loan programs processes and outlined their frustrations.
“Bright has not been explicitly rejected by the DOE,” the Bright executives wrote, “rather, we have been forced to say ‘uncle….’”
“Last week we received the fourth ‘near … Read More ➡