Posted on 12/05/2010 8:47:58 AM PST by null and void
In the depths of the financial collapse, the U.S. Federal Reserve pumped $3.3 trillion into keeping credit moving through the economy. It eventually lent $57.9 billion to the auto industry — including $26.8 billion to Ford, Toyota and BMW.
The Fed on Wednesday was forced to reveal the identity of the companies it aided during the crisis, after contending to Congress that keeping their identities and the details of such lending secret was essential. Much of Wall Street, and corporate giants such as General Electric, Harley Davidson and McDonald's, took advantage of the Fed's help. We've done the math on how the Fed propped up the auto industry.
While Chrysler and General Motors had to go to Congress to beg for cash in 2008, every other automaker's finance arm was having trouble as well. Typically, once they lend money to a buyer, they sell the loan, get the cash upfront, then pump the proceeds back into the business. They also take out short-term loans called commercial paper that keeps the day-to-day business afloat. The crash cut the circuit, raising the chances the automakers couldn't make loans to buyers and keep selling new vehicles.
That's where the Fed stepped in. In normal circumstances, the Fed only lends money to banks, leaving the decisions about who should get credit to them. But when the financial markets started to collapse in late 2008, the Fed set up several programs to lend money directly to corporations, a highly unusual step.
According to the data, from October 2008 through June 2009 the fed bought $45.1 billion in commercial paper from the credit arms of four automakers - Ford, BMW, Chrysler and Toyota - along with GMAC (the former General Motors credit arm). Of those, Ford sold the most, with $15.9 billion.
The Fed also lent $13 billion to investors who bought bonds backed by loans to new car buyers from automakers and banks. The Fed made clear that while investors got the loans, the move was meant to keep the lenders in business; the credit arms of Ford, Chrysler, Nissan, Volkswagen, Honda and Hyundai all benefited directly.
Ford spokeswoman Christin Baker said the two programs "addressed systemic failure in the credit markets, and that neither program was designed for a particular company, or even a particular industry." Ford Credit has disclosed through SEC filings and conference calls with media and investors that it was taking part in both programs.
BMW told Bloomberg that the Fed lending "supported our financial profile and offered us an additional funding source, especially at times when the money markets and capital markets did not function properly and efficiently."
According to the Fed, the commercial paper loans have been paid in full, while some $2 billion remains outstanding on loans for bond investors.
The secrecy surrounding the details of the loans only masked how much aid corporate America and Wall Street needed. While General Motors and Chrysler took the brunt of the blowback for relying on government handouts, the reveal of the Fed numbers show that a far bigger slice of the U.S. auto industry needed help.
This one strange scenario.
Catepillar got dollars but laid off workers
Harley Davidson got dollars but is moving out of the country.
Something does not add up at all.
I would not say it was a secret, any more than it was a secret that Citibank took federal money.
Commonality = democrat donors
It’s a NEW WORLD.
Welcome to the world without borders (well, everyone else has borders, but the United States no longer has them).
Since most of the World is so extremely poor, our resources must be shared (given) to the ruling elite in the rest of the world so they can get extremely rich, and have an easier time ruling over the extremely poor.
Than the management run companies we have now, where its not their money at risk.
Wow!
I guess Honda’s the only auto manufacturer left to respect.
And people still have the gaul to trash ron paul.
Unbelievable.
This^^^^^^^^^^^^^. D&R are both puppets of the corporate elite.
Guess it’s time to buy an Audi or a Porsche!
Outrageously unconstitutional. It amounts to criminal conduct for those that conspired to steal the money.
Subaru. Subaru is good.
“Honey, Ford and Toyota took loans from the Fed—I had to get a Porsche!”
Just give it time..they will have their little paws out sooner or later if they have not done so already.
Socialized losses privatized profits. That is the new economic system..sadly.
I will keep my volkswagen. it is a classic it goes through snow, and ice and there is no money owed on it. Worth more now than what I paid for it. Think I will get another volkswagen. get rid of the ford escape and the ford zx2. I love the 4 wheel drive on the Escape but I am confused here . Ford took no bailouts, but Ford credit took a secret loan. something does not sound right.
Looks like Audi and Porsche are the other German autos with no secret loans. Japanese are Honda, Subaru and Mazda. Korean are Hyundai and Kia.
Oh well what’s next Kraft foods got a loan, so did Nabisco, Keebler, Ocean Spray and so on so forth? What is the government in every business?
I was seriously considering a Ford sometime in the spring of next year. This is seriously disappointing. There are plenty of people who delibertately purchased Fords because “we didn’t bail them out”.
Back to Honda I go. (If I win the lottery it will be to Porsche I go!)
Does anyone know if Mercedes Benz took federal money - as it is no longer involved with Chrysler?
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