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.
“And people still have the gaul to trash ron paul.”
- - - and General Motors.
Oh and another thing, notice this dump this on a Sunday when no one is paying attention!
I have the textbook:
The Vampire Economy Doing Business Under Fascism, by Günter Reimann
We have been shopping cars for my wife the last few months and this release of info took all the Toyota vehicles off the shelf. Ford was in the running w/1 vehicle, but is also out.
Harley is opening a plant in India in order to assemble and sell bikes in India..a plus for the US economy.
Caterpillar laid off people because of declining demand for tractors and engines. Caterpillar used funds from the Fed to continue financing the sale of machines when the banks were essentially out of business to support Cat. Cat was one of the first companies that was able to once again sell their financial paper on the open market and pay off the the Fed.
Without this temporary financing by the Fed..with the banks out of business because of their bad realestate loans..a lot of the economy would have ground to a halt.
The commercial paper market froze up during the panic. The bailout money (TARP) is the taxpayer money we'll never fully recover from GM and Chrysler.
The short term, commercial paper, loans Ford took from the Fed (not taxpayer money) has already been paid back in full.
The Fed doesn't loan taxpayer dollars. The taxpayer didn't get the shaft.
I have an Idea - Lets call in our loans.
I have an idea, learn how to read.
According to the Fed, the commercial paper loans have been paid in full
I don’t think it’s so much a matter of Ford doing poorly as it is that unlike GM and Chrysler, Ford was selling cars, and the government was making money available so that it could finance them. Basically, it was another Obama effort to prop up the economy.
Ford Credit did not need a bail out because it doesn’t make home loans for the most part. It makes auto loans. The point here is that Ford was selling cars, and the Fed was making money available to Ford so they could continue to do so, despite the collapse of the financial markets.
Big deal. This is like a kid stealing money out of their mothers purse and saying it was no big deal since he paid it back.
The Fed loaned the money. How is that like stealing?
and saying it was no big deal since he paid it back.
Whining that the taxpayers got the shaft when their money wasn't involved (and the loans were all repaid) is stupid.
Where do you think the fed gets money from.
A govt cannot make different deals with different companies like this. What applied to GM and Chrysler must apply to the rest. The govt took OWNERSHIP of GM and Chrysler! They made them shut down dealerships! They gave the companies away to the Unions! They DID NOT do this to FORD!
Google the Ford Foundation and see what they do...how about support all Muslim nations? Do a little bit of research to see that Momma Obama and Tim Geitner’s Daddy worked for the Ford Foundation.
And that's why it was done in secret. It was done to destroy Ford's competition, and it hurt a whole lot of people that lost their jobs and their dealerships. It cost 2 companies their ownership, bought and sold by the govt.
It would not have been done in secret if it was even the slightest bit innocent. Ozero does nothing for the good will of the American people.
‘With respect to all here..’
The Fed is a private Co. That still does not alter the fact that Corporate Welfare has got to stop. It is the only way to STOP the idea of privatize the profit and Socialize the lost. That is how we got into this so called “State Capitalism”.
“Something does not add up at all.” ~ Carly
Link: http://www.freerepublic.com/focus/news/2637720/posts?page=20#20
They can create it from thin air.
Taxpayer dollars are dollars raised from taxes or borrowing.
There is a difference.
And Ford Motor Company went public saying they refused any bailout money all the while they secretly got it. Without a govt takeover too! Isnt that sweet.
Ford MoCo, is so screwed now.
http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article5611933.ece
The Ford Foundation is not controlled by Ford Motor or the Ford family. When Henry Ford II resigned from the board in 1977, he expressed his disgust at what it had become. If Obama bailed out Ford thinking he was doing a favor to the Ford Foundation, then he’s a lot dumber than he looks.
It was no secret that Ford Credit got a loan from the Fed. At the time, it was well known that the Fed was giving virtually every financial institution in America free access to the Fed discount window. That was how they were funneling money into the economy. The credit markets were completely shut down, and no one could borrow anything. They were eager to fund businesses which were still operating, and Ford, unlike the rest of the auto cos, was still selling cars, so the Fed made money available to them so that they could do auto financing.
The libs are anxious to make it sound like their policies bailed out Ford. Remember when Harry Reid stated that Ford got a bail out? They love it when folks make it sound like the capitalist system would have collapsed but for them. In reality, none of these companies would have needed a bail out but for the federal government messing up the housing industry and causing the collapse of the banking industry.
Ford Credit was not in the home lending business. They just made auto loans. The reason the Fed made money available to them was that there was no other way to fund automobile purchases without it since the banking system had collapsed.
As proof that this was not a secret, here is an article from the Wall Street Journal, March 14, 2009, which discusses the matter:
TALF Is Reworked After Investors Balk
By LIZ RAPPAPORT
After failing to sign up enough investors in time to launch the Term Asset-Backed Loan Facility early this coming week, the Federal Reserve and Wall Street are reworking the TALF program at the 11th hour.
The Fed delayed the program’s launch by two days, until Thursday. Wall Street dealers, including J.P. Morgan Chase & Co. and Barclays PLC’s Barclays Capital, have created vehicles to participate in the TALF that would allow investors in the program to circumvent many of the restrictions laid out by the Fed. The vehicles resemble collateralized debt obligations, or CDOs, and use some of the financial engineering that was partially responsible for the collapse of the credit markets.
The Fed, eager to get what it hopes will be a $1 trillion program up and running, has blessed the vehicles because they open the TALF up to a much larger group of investors, say people familiar with the matter.
The vehicles emerged late in the past week, after investors cringed at signing agreements with Wall Street firms that would facilitate the Fed’s loans. They objected to the level of scrutiny that dealers would have over their books, arguing that the dealers’ rules attached too many strings. Dealers were saying they take plenty of risk to facilitate the program and need to be protected in situations where the collateral or the client made mistakes or wound up ineligible.
The Fed’s main goal in forming the TALF is to bring to life the asset-backed securities market that effectively subsidizes loans to consumers and businesses to buy cars, pay for their educations, buy farm equipment or use credit cards. The Fed has said it could expand the TALF to include commercial and residential mortgage lending.
Through the program, an investment fund can put down $5 to $14 for every $100 it plans to spend, borrowing the remaining $95 to $86 cheaply from the Fed. It agrees to buy highly rated securities issued by lenders that the Fed deems eligible collateral for the loans.
Much is at stake for TALF, including more than $10 billion in expected deals for companies, including auto lender World Omni Financial Corp. and Ford Motor Co.’s Ford Motor Credit Co., say bankers. Likewise, the Fed has a lot riding on the program after it expanded its scope before the launch...
This was only part of the effort, however. The key difference between this and what the government did for GM is that in the case of GM, it took an equity position. Here, it merely did for Ford Credit essentially the same thing that it does for every bank, even when times are not bad. The Fed prints the money and loans it to the banks. That is one of the main ways the money gets into the system. Since the banks were not lending during the financial collapse, the Fed decided to loan money directly to businesses in order to bypass the banks. It’s not the same thing as the GM bail out.
There are no American interests, only global interests. It's constituents are foreign governments and power brokers. Our money is everyone’s money. They are not kidding when they call our president “the leader of the free world.” We are just one of many global constituents.
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