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.
As a small business owner barely doing more than paying bills and in a truly survival of the fittest situation these stories are so infuriating you have no idea.
The corporate welfare has got to stop.
My wife and I own 2 small businesses. About 8 employees between us. I know where you are coming from. Many years we had to cut our income to keep things going all the while some of our employees actually made more money than us.(We had to continue to pay their salaries lest they leave)
On April 24 2009, Daimler sold off it 19.9% share in Chrysler. It will forgive Chrysler Cerberus the 1.5 Billion loan from the US fed. Yes Mercedes benz even got money from the US taxpayer.
Yup. The more that is brought to the forefront, the more Paul is vindicated.
At the time it was difficult to understand how Ford was not mentioned along with GM and Chrysler. Now comes Ford was given bailout money but under the table. Still possible that old ties of Ford Motor and Ford Foundation brought back warm feelings to Geitner.
At the time it was difficult to understand how Ford was not mentioned along with GM and Chrysler. Now comes Ford was given bailout money but under the table. Still possible that old ties of Ford Motor and Ford Foundation brought back warm feelings to Geitner.
6th paragraph the credit companies that benefitted included Ford, Volkswagen, Honda, Hyundai and Nissan. This is ridiculous. So now the taxpayers are getting the shaft for credit for foreign companies, foreign nations and foreign banks - What is the ne motto - USA - The Bank Of The World.
I have an Idea - Lets call in our loans.
What is this the Second Marshall Plan to rebuild the world a new after the devastation caused a second time by WWII
My assistant netted more than I did last year. When I hear people trash ron paul for his outspokenness on what the govt is doing with the help of the federal reserve I just wince at the leve of stupidity they display.
Socialism for the bankers and corporate failures, survival of the fittest for the rest of us.
Why yes. And along those lines, Larry King had the international criminal and "richest man in the world" on his show yesterday: Carlos Slim Helu, of that famously wealthy and productive nation....Mexico.
That's right folks! The Richest Man on the Planet lives in...the murderocracy to the South which is currently colonizing the United States.
And you know that Mr. Bernanke made sure that Mr. Slim didn't lose his little trade protected empire to the downdrafts of credit.
Welcome to debt slavery of the pan-national banksters.
With respect to all here, without a functioning money market, major businesses would collapse. On any given day, the Fortune 100 transacts billions of dollars. Commercial paper and overnight loans cover most of that action while accounts receivable are collected.
The Federal Reserve is the central bank of the US and acts as the bank of last resort. Since the money and capital markets had all but collapsed in 2008, it stepped in to restore the money markets, keeping major businesses alive, while also collecting interest on the short term (less than 270 day) loans.
We cattle are being set up for one world currency/gov.
enjoy.
I searched through Wolkswagen AG - and guess what you will be shocked Porsche owns 50.76% in shares in Volkswagen, since 2005 Porsche has been staedily buying more and more stock shares of VW, started at 18,3% and in 2009 it was up to what is now owned.
VW AG has a stake in the following car manufacturers too Audi, Skoda, Lamborghini, Bentley and Bugatti. Just thought you and other Freepers would like to know. So if you buy a Porsche, in essence you are buying a VW share in the US Debt.
So Buy American - now means you can buy a Porsche, Lamborghini, Bentley, Bugatti, Audi, Skoda, Volkswagen Mercedes Benz, Chevrolet, Buick, Honda, Hyundai, Nissan, Ford, Chrysler, Fiat and God knows what else.
Moving out of the country? In what way?
>> without a functioning money market, major businesses would collapse <<
You’re exactly right, of course. I think we truly should thank God that we had a central bank able to save the commercial paper market and the rest of the financial system from a complete meltdown. It was a “100-year flood” event that called for extraordinary action, and the Fed deserves our plaudits — not the petty sniping of a proven nut-case like Ron “I love Assange” Paul.
Now that we’re past the crisis, the task for the Congress, the executive branch, the international community and the punditry is not to excoriate the central bankers — who did their dead-level best to save the entire financial sector — but to reform the governmental institutions and regulatory structures that were root causes of the crisis, so as to postpone the next near-catastrophe for another 100 years.
I knew that something had gone down that we didn't know about, and there it is! I had twittered on this many times before. It just didn't make any sense. But no take-over of these companies..they tried to take down the giants, GM and Chrysler.
Many of us remember how they hard balled them, but not the rest? Was this intentional? You betcha! Were the feds intentionally crippling the credit market to hurt these companies to do what they did? You betcha!
What they did was illegal! And instead of putting a lein on the company until it paid it back, look what they did to 2 U.S. companies...illegally and not to the rest. And if they twisted the arms of the bankers, they forced these companies to take those terms.
Remember back when that one banker was forced to sign a legal paper even though his bank was just fine? Its time to impeach, our Congress better look into this and I mean with a fine tooth comb and undo what they did to Chrysler and GM NOW!
Moving a plant to Mexico. Been in the news a couple of months back.
Probably with O’s blessings.
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