Posted on 11/25/2010 8:11:23 AM PST by OwenKellogg
In November 2010, GM sold stock in a public offering.
At the same time, the President announced that the tough decisions made during his administration were beginning to pay off. He also indicated that the “American taxpayers are now positioned to recover more than my administration invested in GM, and that's a good thing”
I do not know whether to be amazed or appalled.
First, contrary to popular administration folklore, GM did not survive bankruptcy. The name did but that is all that happened. A new company acquired the name and assets of GM and is now the company being called GM. I wonder if the GM commercials tracing its history back to the older GM without a disclaimer is being honest with those of us who own you – the American Taxpayer.
Additionally, GM’s profit of $2 Billion in this most recent quarter is a little puzzling as well. The difficulties involving the financials for a large company are well known but the disclosure statement by the company about its internal controls concerns me. I am more puzzled about the $2 Billion in profit in light of the following disclosure (Page 166) from the GM 3rd quarter 2010 SEC filing: “We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective. The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan.” If control deficiencies were not enough, I am troubled as well by the presence of some items on the GM Balance Sheet, the valuation of which is subject to significant interpretation. Specifically, the company lists over $30 Billion of goodwill. Goodwill? Really? I am certain that someone can justify this number but then again, someone justified the bailout to begin with.
GM’s profit and alleged success serve as a horrible payback to those who owned over $100 Billion in debt forgiven and shareholder value lost over the recent decade. To proclaim a success from such a travesty is difficult to understand.
Bankruptcy is intended to serve as a fresh start. It is intended to help people and organizations begin again and restore themselves to profitability or financial health. To boast of your success after so many millions have been hurt is devastating.
The real success story in my mind is Ford Motor Company and the United Auto Workers at Ford who worked feverishly with one another to restore profitability in a very difficult economy.
Ford earned approximately $1.7 billion on much lower sales than GM’s. Ford’s shareholders and employees also benefitted. The U. S. Treasury benefited in that a tax provision of almost $200 million was recorded in the quarter. Paying taxes versus receiving bailouts is such a patriotic thing to do according to Vice President Biden. Thank you to the Ford team.
As a result of the Ford team efforts and their cooperation with one another, new Ford is the old Ford. Ford’s commercials will not need to be disclaimed. Does that mean that Ford did everything right? Absolutely not but it does mean that management, employees, the unions, dealers, suppliers, local government and lenders worked together to resolve an incredibly difficult problem and they did so successfully.
I realize that this is not much consolation to Ford or its team, but since the President has decided to laud the activities of those who took the easy way out, let me be one of the first to laud you and your entire team for a job well done! That is the true recession success story. Let ‘s celebrate that.
*****
Frank Ryan, CPA ran for the U. S. Congress in 2004 and again in 2010. He specializes in corporate restructuring and lectures on ethics for the state CPA societies. Frank is a retired Colonel in the Marine Corps Reserve and served in Iraq and briefly in Afghanistan. He is on numerous boards of publicly traded and non-profit organizations. He can be reached at FRYAN1951@aol.com
From the bondholders whose claims were denied despite their standing in the long precedent of law, to the current GM financial statements which are troubling (who did that audit?), to the success of Ford through these troubles without any government help, the current adminsitration can claim nothing better than the Wizard of Oz.
November 18, 2010 3:30 P.M. By Stephen Spruiell
http://www.nationalreview.com/corner/253551/gm-stephen-spruiell
Good article, there, too.
You just have to wonder when GM will be in crisis again? If it comes before the next election, that would be helpful for the conservatives in 2012.
Who denied their claims? Please refresh my memory. There are so many negative things going on, my head is spinning.
It’ll be a success story when all the bond holders, creditors and those who had preferred stock are paid back what they lost by the failure to liquidate for fair market value three years ago.
How fast can union thuggery move?
That will be the determining factor.
They weren’t outright denied. They were told (aside) if they made waves they would pay and pay heavily. In the end, the investor’s investments were stolen and given to the Unions and Obama. Anyone that buys one share of stock in GM is a frackin idiot, in my opinion.
Someone has been cooking the books for politics. Sounds like the unions are doing them, $30 Billion in Goodwill?
Happy Thanksgiving
Well, we’ll all find out when Obama tells you that the only car you can now buy is a Chevy Volt.
patriots dont buy GM.
Actually, the “owner” who “acquired” GM through the ‘guidance’ of the White House is an Obama crony.
That’s all that there is to say.
There was a complete overturning of the rule of law in this crisis action by a runaway government
Yes, but they were also coerced not to appeal.
Ford certainly has risen to the top of the list of options.
GM and Chrysler have sunk to the bottom.
“We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective. The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan.”
... the handwriting is on the wall. That quote is an admission that the books are not to be trusted.
If they can force you to buy insurance. Why not a Volt or a Windmill?
ping
My wife whom I married in 1974 came from Czechoslovakia. She, her sister and parents fled there in 1968. She’s often told me of the car her father years before had ‘ordered’ and waited years for. It was a Skoda - a sort of socialist republic ‘peoples wagon’......actually, not a bad car in the scheme of things if you can forgive being produced by people who pretend to work by a government pretending to pay them. I’d imagine a CHE’vy Volt is much the same.
GM and Chrysler are somewhere down there under tiny $3000 cars from India with no safety or emissions equipment that are illegal on American roads.
As an old-GM bondholder, I’d say that anyone who bought the GM IPO is dealing in stolen goods, because the US government, GM management, and the UAW conspired to steal the company from the bondholders.
Goldman got 0.75% of the IPO’s $33 subscription price and distributed IPO shares to well-connected subscribers at $33, who then fenced 86 million shares for $36 to the public in the first five minutes of trading. About 458 million GM shares traded on the first day, and virtually every transaction after the first five minutes resulted in a loss that day.
The stock closed at $33.48, a half-point above the IPO price, but significantly lower than the $36 paid by retail speculators in the stolen company.
I can’t wait to short this turkey. Unfortunately, it takes a month or so before an IPO can be shorted.
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