Ford Chairman Bill Ford is trying desperately to put some daylight between his industry’s bailout request and the ongoing mop-up of what’s left of the U.S. financial system. “People see this as a very separable issue,” Ford told Automotive News [sub] after an epic DC beg-a-thon. As gung-ho as Michigan reps are to see their home state rake in the federal scrilla, there’s indication that even there the “separability” of bailouts may be strained. Rep Candice Miller R-MI, who organized the meeting with Ford and others, said afterwords that some lawmakers still have questions about the loan request– aggravated by the upheaval among major financial institutions over the past days and weeks. These concerns center on analyst predictions that the fed’s decision to allow Lehman Brothers to fail was a line drawn in the sand. Though she calls the new $7.5b cost estimate for the first $25b “too high,” Miller can muster only “cautious optimism” about the future of the bailout push. And while Bill Ford and Mark Fields sing for their supper in DC, bean counters in Dearborn are trying to figure out Ford’s exposure to the bankrupt Lehman Brothers mess. Reuters reports that Lehman Commercial Paper had committed $890m to an $11.5b revolving credit facility under a secured credit agreement reached in December 2006, all of which is presently unfunded. Lehman Brothers Bank FSB also provides $238m of facilities totaling $16.3b that support the retail securitization program of Ford Motor Credit Company. These subsidiaries are not listed in their parent company’s bankruptcy filing. But since Ford mortgaged itself to the hilt in 2006, the unraveling credit-market could still hit Ford where it hurts.
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If letting Lehman Bros. go bust was “a line drawn in the sand” what the HELL does that make the AIG bailout?
CarShark: To a government paper pusher and giver of our tax money a line in the sand only means it ca be moved to the next line in the sand when the tide changes, for political expediency and ass covering.
If letting Lehman Bros. go bust was “a line drawn in the sand” what the HELL does that make the AIG bailout?
The line in the sand wasn’t that no more companies would be bailed out. It was that companies of Lehman’s size and importance, and of less size and importance, would be left to go Bankrupt.
Regardless of whether it should have been saved AIG was much larger and much more important than Lehman.
Unfortunately for GM, Ford and Chrysler they fall on the wrong side of that line in the sand – except for the issue of Michigan being an electoral college swing state.
FYI: Have Detroit’s Bailout Notions Been Quashed?