WHY TARP NEEDS OVERSIGHT The announcement that the government would provide $30 billion dollars more in TARP funds to General Motors in exchange for a 60 percent ownership interest in the company is unprecedented and almost unbelievable. Who ever imagined the taxpayers would wake up Monday morning and find out a deal was cut behind closed doors to make them majority owners of General Motors? If you add all of the government aid GM has or will receive, the taxpayers, with zero input, have invested $50 billion dollars in a …
From June 4th’s Wall Street Journal: Like a magician who artfully controls his audience’s attention, the government’s General Motors investment is all about financial diversion. Here’s the fancy trick: It won’t be very hard for a revamped GM to succeed at making a buck. Its debts will be cut from about $73 billion to about $17 billion. Its labor costs will be reduced by as much as $2 billion a year. On Wednesday, GM got even more help. GMAC, which funds dealers and car buyers, began issuing $3.5 billion in …
Announcing the nationalization of General Motors this Monday, President Barack Obama insisted, “What we are not doing — what I have no interest in doing — is running GM. … When a difficult decision has to be made like where to open a new plant or what type of new car to make, the new GM, not the US government will make that decision.” But just hours earlier, President Obama was on the phone telling Detroit Mayor Dave Bing he would not allow GM to move its headquarters out of …
Today, the Senate could pass a Food and Drug Administration bill that would grant the agency new authority to regulate tobacco products. Slipped into that bill is a newly introduced amendment that would, for one year, attempt to boost car sales and reduce carbon dioxide emissions: Sens. Debbie Stabenow, D-Mich., and Sam Brownback, R-Kan., introduced an amendment Tuesday that would set up a program that allows consumers with older, less fuel efficient vehicles to trade in their “clunker” for a voucher worth up to $4,500 toward the purchase of a …
Government control of General Motors is likely to throw the company into reverse gear rather than forward. By rewarding bad behavior with $50-billion, President Obama has created powerful incentives for even worse performance. In his New York Times column today, David Brooks lays out six reasons why the latest bailout will backfire: GM has been cut off from innovative thinking. Because Obama wiped out existing bondholders in favor of unions, no outsiders will be willing to bring fresh capital and ideas to GM. Insiders who sank the company remain in …
Yesterday, after President Barack Obama again insisted he did not want to run General Motors, we questioned just how reluctant a shareholder the Obama administration will be. Thanks to the Wall Street Journal, we’re beginning to get our answer: The President is so busy not running GM that he had time the night before to call and reassure Detroit Mayor Dave Bing about the new GM’s future location. GM is being courted to move its headquarters to nearby Warren, Michigan. And Mr. Bing told the Detroit News that he had …
At midday today, President Barack Obama will announce details of his administration’s $30.1 billion plan to restructure General Motors. Despite claiming that the administration “will not interfere with or exert control over day-to-day company operations” it is instructive that this announcement is being made by the President, from the White House, and not by the company’s CEO from either the company’s Detroit headquarters or the New York bankruptcy court. Since March of this year when the White House rejected GM’s restructuring plan, their interventionist actions have spoken much louder than …
Heritage fellow James Gattuso: Congratulations: If you are a U.S. taxpayer, you will soon be a part owner of a car company. Under the latest reorganization plan for General Motors, Uncle Sam would take ownership of 72.5 percent of the troubled automaker while providing an additional $30 billion in funds to the company. The proposed deal would give Washington controlling ownership of a major industrial corporation for the first time since Conrail railroad was sold in 1986. And, along with the pending acquisition of a minority stake in Chrysler, it …
Today President Obama stood on the world stage and demanded that suspected terrorists be treated under the “rule of law.” In fact, he used the phrase “rule of law” eight times. It is now time for him to use the phrase “rule of law” when it comes to Americans. In the next two weeks, the President will likely endorse a series of measures in his role as CEO of the car companies that may violate a number of U.S. contract laws, bankruptcy laws and financial rules and regulations. The United States …
The government handed out billions of dollars in taxpayer money for General Motors and Chrysler to save jobs and become economically viable as fast as possible. No such luck with Chrysler. If returning to viability is the target, GM may have to turn to imports: General Motors is engaged in negotiating a reorganization that could increase vehicle imports from its plants in Mexico and Asia while closing factories and cutting the work force in the United States. That approach drew a sharp rebuke from the United Automobile Workers union on …
