Tag Archives: TARP

Shame on the Gulfstream Class

19 Nov

This sticks in my craw, and should stick in yours, too:

The CEOs of the big three automakers flew to the nation’s capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.

The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough.

All three CEOs – Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler – exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM’s $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

“We want to continue the vital role we’ve played for Americans for the past 100 years, but we can’t do it alone,” Wagoner told the Senate Banking Committee.

While Wagoner testified, his G4 private jet was parked at Dulles airport. It is just one of a fleet of luxury jets owned by GM that continues to ferry executives around the world despite the company’s dire financial straits.

“This is a slap in the face of taxpayers,” said Tom Schatz, President of Citizens Against Government Waste. “To come to Washington on a corporate jet, and asking for a hand out is outrageous.”

Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.

When you come begging me for my tax money, fly commercial, asshole. I don’t care if you’re so important that you need to fly first class, but fly commercial. Sell the G4. $20,000 to fly from Detroit to DC is shameful for a company that’s supposedly hemorrhaging cash. Ford still operates a fleet of eight corporate jets for its kings of fail.

Bail Out Some Company that At Least Tried

12 Nov

Honda builds almost all of its domestically sold vehicles in Canada and the US.

Toyota builds almost all of its domestically sold vehicles in Canada and the US.

They are innovative, have good mileage, have sometimes-cool, sometimes-bland design, and sport class-leading interiors that have high perceived quality. They have been doing this for at least a decade.

What’s Detroit’s excuse, exactly? The big competitor to the Accord and Camry is the Malibu? The pre-Fusion Contour? (The Fusion is better, but still light-years away from being a Camry or Accord, interior design & feature-wise). For waaaay too long, Detroit practically ignored passenger car R&D and design in favor of bigger and thirstier trucks and SUVs. Until very, very recently, GM’s Saturn sold cars with such shitty design, inside and out, that they could easily be substituted for Ipecac.

And they deserve a bailout?

Andrew Cuomo vs. Theft

30 Oct

No joke – New York’s Attorney General is looking into whether or not banks are using the receipt of federal bailout funds as part of their yearly bonus calculations.

New York Attorney General Andrew Cuomo is demanding information about executive compensation and bonuses at nine banks that have received federal funds under TARP, the U.S. Treasury’s Troubled Asset Relief Program.

In a letter to each institution’s Board of Directors, Cuomo warns the bonuses could violate New York’s state fraudulent conveyance law.

“Obviously,” he writes, “we will have grave concerns if your expected bonus pool has increased in any way as a result of your receipt or expected receipt of taxpayer funds from TARP.”

In the letter, Cuomo demands information on how this year’s bonus pools were calculated, as well as details on each bank’s 2006 and 2007 bonus payments.

The bailout was very painful and controversial, and the money is to be used for very specific purposes. Bonuses for executives was not among them.

Detroit’s Chickens Coming Home To Roost

13 Oct

The domestic auto industry is getting its own bailout to the tune of $25 billion. Remember George W. Bush’s bleating 8 years ago about tax dollars being the people’s money? The people’s money is going to subsidize and prop up a lot of businesses that have made trillions taking the taxpayer, flipping him/her over, and doing very bad things to him/her.

I’m not banker or Wall Street whiz, so what little I know about what’s going on over there hardly makes me qualified to go into any detail about it.

But the auto industry – the domestic auto industry, to be specific – has been operating under a 60s mindset over the last decade. Build it big with lots of mostly-needless “features”, without regard to gas mileage. While Honda and Toyota were busy developing hybrid powertrains – even when gas was $1.50/gallon – GM, Ford, and Chrysler did nothing of the sort. They made their money off Silverados, Tahoes, Explorers, F-150s, Rams, and Grand Cherokees. Those vehicles are lucky, each of them, to pull in 15 MPG in combined city/highway mileage.

The use of petroleum products is a national economic and security issue, at this point, and the federal government since the 70s gas crises has mandated that the corporate average fuel economy (CAFE) of passenger cars sold in the United States meet some median MPG figure. Until very recently, the CAFE rules exempted most pickups and SUVs from the calculus, so the big three were happy and free to build idiotic gas guzzling megatrucks with impunity, and relegated passenger car design and sales to almost exclusively rental fleet sales. Anyone out there own a mid-90s era Chevy Malibu or Ford Contour? How about a Dodge Stratus? While Honda’s Accord and Civic, and Toyota’s Prius and Camry became the state of the art of passenger cars, Detroit concentrated on trucks and SUVs, foisting on us the craptastic Chevy Cobalt, the made-with-Matchbox-car-plastic Dodge Caliber and the now decade-old Ford Focus in order to meet CAFE standards.

The trucks and SUVs were cheap to build, used identical chassis and powertrains, and made the big three a whole lot of money. Domestically, anyway.

Until 2007, CAFE required cars to get 27.5 MPG, and light trucks 20.7 MPG. In the meantime, average fuel economy in other parts of the world is pretty routinely 30% higher due to the use of clean diesel and other smaller-engine technologies. In 2007, the US government passed a law requiring entire fleets – including light trucks – to meet 35 MPG on average by 2020.

When you consider that the domestic market reached its peak fuel economy in 1987 at 26.2 MPG, and by 2006 had fallen to 24.6 MPG, you have to ask yourself why the hell Detroit deserves a bailout of any kind.

It strains credulity and boggles the mind that the auto industry, which so opposed tightened CAFE standards for many years is now coming to the US taxpayer, hat in hand. The biggest slap in the face is the fact none of the big three have any excuse whatsoever to be in the position they’re in. Like a broken record, I will direct you to the websites for Ford UK, Opel/Vauxhall (GM Europe), and Daimler-Benz, (which until recently owned Chrysler). All three domestic automakers are quite capable of making modern, fuel-efficient, low-CO2 producing motor vehicles. The problem is they kept them away from the US market and sold them in countries where fuel is more expensive and regulations are more stringent on mileage and emissions.

The last time a US automaker came to Uncle Sam begging for a handout, it was Chrysler in the early 80s, facing bankruptcy and astonishingly turning itself around with the craptastic K-Car. Then, as now, it was a domestic automaker that kept on making shitty, gas-guzzling vehicles during a gas crisis, and found itself with cars that no one wanted. One might have thought that the lesson had been learned. Now, all three are in big trouble, as evidenced by the stock prices for Ford and GM, which are at historic lows not seen since the 1950s.

You can now buy one share of Ford stock for about 60% of the price of a gallon of gasoline:

There is talk of Ford merging with Chrysler. All I know is that the domestic automakers are caught in a disaster of their own making, and it’s beyond offensive for taxpayers to bail them out of their own dumb and short-sighted decisions in a country where, e.g., working people go bankrupt trying to pay medical bills.

AIG Plays You For A Sucker

8 Oct

This story pretty much defines the words “outrage” and “unbelievable“:

Days after it got a federal bailout, American International Group Inc. spent $440,000 on a posh California retreat for its executives, complete with spa treatments, banquets and golf outings, according to lawmakers investigating the company’s meltdown.

AIG sent its executives to the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy. The resort tab included $23,380 worth of spa treatments for AIG employees, according to invoices the resort turned over to the House Oversight and Government Reform Committee.

The retreat didn’t include anyone from the financial products division that nearly drove AIG under, but lawmakers still were enraged over thousands of dollars spent on outing for executives of AIG’s main U.S. life insurance subsidiary.

“Average Americans are suffering economically. They’re losing their jobs, their homes and their health insurance,” the committee’s chairman, Rep. Henry Waxman, D-Calif., scolded the company during a lengthy opening statement at a hearing Tuesday. “Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation.”

Maverick

6 Oct

In the late 80s, early 90s, the US underwent an earlier set of bank failures, fraud, and bailouts. Ladies and gentlemen, John McCain and Charles Keating.

[HTML1]

Chris Lee Exits Cave, Discovers Fiscal Meltdown and Bailout

4 Oct

Very convenient of Mr. Lee not to say a single. solitary. word. about the fiscal meltdown and bailout 1.0 or 2.0 until after the passage of the latter.

And spare me the trite observations about him being a “frontrunner” who doesn’t need to opine or expound on issues facing Americans today. That’s beside the point.

The point is that he’s the self-anointed “businessman” candidate du jour. He has made himself out to be Chris-Collins-goes-to-Congress. The only problem with that is that Chris Collins is a clever, self-made millionaire. Chris Lee’s cleverness hasn’t yet been tested, as he hasn’t bothered to debate anyone yet (see frontrunner discussion, supra), and his millions came after the family sold off the company rather than have him run it.

The Batavian caught up with Lee today:

Republican congressional candidate Chris Lee told me this afternoon that Congress should have passed the “stabilization package” (he doesn’t like the word “bailout”) on Monday.

He said what Congress passed Friday, with it’s millions of dollars in pork spending, demonstrated that some members are “more concerned with saving their seats than with doing the right thing for the country.”

When I asked him about how Democrats blame deregulation, and Republicans say there are still too many regulations — such as Sarbanes-Oxley, which did nothing to help matters — Lee said, “We have all of these new exotic financial instruments, so we need updated regulations to ensure we have control.”

“There have mistakes made, and I don’t like to point fingers,” said Lee, adding again that both Republicans and Democrats share the blame. “I don’t care about any of that. I care about getting to a solution and protecting taxpayers.”

Oh, hi, Chris. Welcome to the discussion that, like, all of America has been having for several weeks now.

This struck me as amusing:

I brought my video camera and wanted to get his answer on video. This is an important issue, and I thought it would be a fairer bit of journalism to let Lee answer it in as an unfiltered way as possible. To me, it’s for Lee’s own good to speak right to the voters and say what he wants to say.

Lee’s campaign manager Nick Longworthy did not want me video taping the interview. I pushed the issue a little bit with Lee, but he wanted to go along with his campaign manager’s advice, and I’m not here to be a jerk and insist on having my way. I’m not Mike Wallace playing “gotcha journalism.” Also, I get Nick’s concern. It would be very easy for the opposition to take a quote out of context and use it in a negative ad.

What difference does it make is Owens gets the quote verbatim in print or videotapes it? What is Lee afraid of? As the business candidate, is that the best he can do?

Bailout 2.0

2 Oct

null

The Senate, which is the more grownup of our two legislative chambers, passed a modified bailout bill last night 74-25 (only Sen. Kennedy was absent). Both Obama and McCain voted in favor of the package, which cancels out any political hay that may have been made about this on the presidential scene.

the Senate also revised the package to blend in more than $100 billion in popular tax breaks as well as aid to rural schools important to House Republicans. And to build support among small town community banks, the bill raises the cap on insured deposits from $100,000 to $250,000.

“This is not just a Wall Street crisis – it’s an American crisis, and it’s the American economy that needs this rescue plan,” Obama said in a floor speech. And behind the scenes he is making phone calls to House Democrats helping to shore up that vote Friday.

The credit markets have been essentially frozen all week, with banks unwilling to lend to each other, and – in turn – unwilling to extend credit to businesses that need it. You want to talk about trickle down? This is it. The tightening of the credit markets over the longer term would have a devastating effect on businesses and the economy. Some form of a bailout was going to have to pass in order to at least prevent a deeper recession.

Now it moves on to the House, which may decide to avoid idiocy and fits of pique and be emboldened by what the Senate has accomplished.

Chris Lee Still Silent on the Financial Meltdown

30 Sep

We already know that businessman Chris Lee has canceled debate appearances with Alice Kryzan, and today we read in the Buffalo News and heard on WBEN radio that he has no comment on the economic crisis and bailout. None whatsoever. Complete silence.

Chris Lee’s continued absence when it comes to the financial crisis is mind-boggling. Either he’s for the bailout that was voted on yesterday, he’s opposed to it, or he’s for something different. He is not courageous enough to tell prospective voters where he stands. How ’bout that.

By contrast, Alice Kryzan has consistently stressed the importance of bringing alternative energy industry jobs to the district, releasing a comprehensive plan detailing how we can strengthen our economy and create jobs, while reducing our dependence on foreign oil and keeping our environment clean.

Despite touting his business expertise, Lee has offered no concrete solutions. Instead, he has argued for a continuation of failed Bush policies, making sure that millionaires get a tax break and that government doesn’t “get in the way.” We’ve seen the results of those failed ideas—financial crisis and more hard-earned taxpayer money going to fix the problem.

For his part, Chris Lee says nothing. He has no plan, no vision, and offers no leadership whatsoever. He does, however, recycle Bush talking points and a poor facsimile of Chris Collins’ winning 2007 strategy.

The financial meltdown and the bailout are difficult issues that further threaten an already reeling economy. I like to see that Kryzan is engaged – talking to voters, offering solutions. Lee? After the bailout bill failed yesterday, I called his campaign office yesterday to ask how he’d have voted for it.

The person on the other end said they’d release something about it “in the next few days”.

It’s been brewing for weeks, and the best they can do is the “next few days”?

How unbusinesslike.

The Stock Exchange is Sorta Like Gambling, Right?

30 Sep