Uncle Sugar has completed the transfer of the first $4b of a $13.4b loan to General Motors, under the Troubled Asset Relief Program (TARP). Despite CEO Rick Wagoner’s previous pronouncement that his employer had enough cash to last through 2009, the artist once known as the world’s largest automaker (and the world’s most profitable corporation) was in danger of running out of money. And now it isn’t. Until later. Meanwhile, you might think that a $13.4b “investment” in GM would buy the U.S. taxpayer a little something called “transparency.” As The LA Times reports, you’d think wrong. “The cash-strapped Detroit company plans to use the money for continuing its operations… GM is obligated to make a large payment to a major supplier in early January; it has declined to offer details on the amount it owes or to which supplier.” And there are more strange doings over at Chrysler. (The automaker’s owned by Cerberus Capital, a private equity firm with close ties to the federal government, increasingly famous for bending rules to its advantage while operating under the cover of darkness.) “Auburn Hills, Mich.-based Chrysler is expecting $4 billion in cash as well, but the Treasury has yet to announce the closing of the first round of loan money. ‘We’re working expeditiously with Chrysler to finalize that transaction and we remain committed to closing it on a timeline that will meet near-term funding needs,’ [Treasury spokeswoman Brooklyn] McLaughlin said. Isn’t it wonderful how responsive our federal government is to the public’s– I mean, private industry’s needs? But wait! There’s more! Lots more!
“Before the deal was signed, the Treasury set out guidelines for what it called the Automotive Industry Financing Program,” the much-relieved Detroit Free Press reports. “which will offer aid to companies similar to the $6 billion injected into GMAC on Monday under the $700-billion financial industry bailout.”
More specifically [via Reuters] a payout depends on “whether a major disruption of the institution’s operations would likely have a materially adverse effect on employment and thereby produce negative spillover effects on overall economic performance.”
So let’s call it the gastric bypass rule: unless you’re REALLY big, you don’t qualify. So I guess it really is about jobs, jobs, jobs. Isn’t it? Despite the fact that small business is the backbone of the U.S. economy.
The word accountability is not in the government’s lexicon. This lexicon is full of euphemisms like Automotive Industry Financing Program.
Oh please…..
So let’s call it the gastric bypass rule: unless you’re REALLY big, you don’t qualify. So I guess it really is about jobs, jobs, jobs. Isn’t it? Despite the fact that small business is the backbone of the U.S. economy.
Something they will shortly learn when small businesses and their employees will be unable to purchase the products of the large union employed companies they’ve so willingly given their largess to.
I wonder when/who will be the first to start filing Freedom of Information requests to better understand what all the cash is being used for? NYT, WSJ, TTAC? Anyone…?
Trick question. No wonder they couldn’t give the identity of the ‘major supplier.’ Because it should read ‘major suppliers,’ the plural form indicating the list of all Tier Ones.
I’m guessing it is Delphi…
MikeInCanada,
The US Fed has ‘loaned’ $2T on an emergency basis to several US banks.
Bloomberg currently has a FOIA suit in progress to find out who got that mountain of c-notes.
Fed ain’t talkin’. They also claim (arguably validly) that they are exempt from FOIA.
As ridiculous as it may seem, $50B+ down the GM rathole is pissing in ocean.
One of my friends runs a GM supplier. He’s never gotten paid on time for the last 3 years. Thankfully, GM is not all of his manufacturing capacity, or volume.
Trickle down socialism for the Too Big to Fail will work no better than trickle down capitalism did with bigger tax cuts for the wealthy than those on the bottom.
For a dose of socialism to have any effect, it must be administered by a shot given to the bottom.
97escort,
Don’t worry, if you are a taxpayer you will definately be getting it in the bottom…
A true “Uncle Sugar” would not steal half our earnings from us…Maybe call it “Uncle Tapeworm”.
So now that GM has accepted loans from the feds they don’t have any right to keep some business information proprietary?
You guys want it both ways. You want to complain that gov’t assistance to a business is tantamount to socialism, but when that business continues to operate the way businesses do (like not give their competitors inside information) you complain about transparency.
What’s next? You gonna insist that GM let every taxpayer (and Toyota) search out every nook, cranny and hard drive at the Tech Center?