Study: 'Successful' auto bailout of GM, Chrysler saved millions of jobs, $284B in personal income

[Redfairen]

Source: MLive

The U.S. government's $85 billion bailout of General Motors Co. and Chrysler Group LLC was more successful than many first anticipated, according to a new study released today.

The Center for Automotive Research study -- called ''The Effect on the U.S. Economy of the Successful Restructuring of General Motors'' --€“ found that the controversial 2008-2009 bailout, saved 2.6 million jobs in 2009 alone and $284.4 billion in personal income was preserved over 2009-2010.

CAR concluded that if the U.S. government had refused to assist GM and Chrysler in their financial crisis of "unprecedented proportions," then the whole U.S. economy would be ''operating without a safety net, with the exception of course, of the banking system.''

The study, which was independently funded by the Ann Arbor-based nonprofit center, comes as the U.S. Treasury is expected to fully exit the Detroit-based automaker by year's end. Once the government completely exits GM the government estimated it will lose about $10 billion, which remains far less than some first predicted.



Read more: http://www.mlive.com/auto/index.ssf/2013/12/study_successful_auto_bailout.html#incart_river_default

[Turbineguy]

1. Impeach Obama!

What about Benghazi?

(I wanted to beat the RW Trolls)

[underpants]

2. +

[riqster]

3. Note the quotes around Successful.

Typical attempts to sabotage the message.

[DallasNE]

4. One Bone To Pick

Last edited Tue Dec 10, 2013, 01:47 AM - Edit history (1)

The article gives Bush credit for starting the bailout. Bush's only role (and it was very minor) was to approve a small "bridge loan" in December 2008 to keep GM operating for a couple of months and required that GM report back with a plan. That's it. When GM came back in March with its plan it was unworkable because no money was available to fund the plan so Obama devised the government backed Chapter 11 bankruptcy plan that was the backbone of the recovery for the auto industry. So, Bush 1%, Obama 99%.

[jmowreader]

5. Bush's goal was to give Obama the same kind of welcoming gift his daddy gave Clinton

The GOP's intention was for Chrysler and GM to collapse right after Obama's inauguration, for then the full blame for the disaster could be placed on the head of the black guy. This is why the bridge loan was granted; Bush knew such a small loan would do nothing but stave off the inevitable. Obama solved the problems Bush created - which is one of the reasons they hate him so.

I wonder though: if GMAC and Chrysler Credit had been barred from making non-automotive loans (they were serious subprime players) would GM and Chrysler have been affected by the meltdown to the extent they were?

[hughee99]

7. While I agree with much of what you say,

is it really accurate to say that the problems at Chrysler and GM were problems that BUSH created? Bush slapped the smallest band-aid he could find on it and passed the issue off to President Obama, but that band-aid was necessary.

[jmowreader]

9. You won't let me blame it completely on Mitt Romney

The subprime problem was created by private-equity firms using collateralized debt obligations to finance takeovers, and Romney was a pioneer in this abomination.

Reminder of how this works:

1. Mortgage companies loan money to people to buy houses, and sell the mortgages to larger banks.
2. Banks "tranche" the mortgages into derivatives called Mortgage-Backed Securities (MBS).
3. They then tranche the MBS into derivatives called Collateralized Debt Obligations (CDO).
4. They write a protective derivative called a Credit Default Swap (CDS) against the MBS, and tranche THOSE derivatives into new derivatives called Synthetic CDOs. (The best part: Synthetic CDOs can be written against MBS you don't even own!)

In case anyone wants to know why there are $15 in outstanding derivatives for every $1 in actual money - yes, including Bitcoins - in the entire world, this is how it got that way.

The whole secret to making this work for corporate raiders, is to make sure you have a ton of junk mortgages to write MBS against. The people who buy bonds used to finance takeovers don't want T-bills plus 30 basis points. Munis will get you that with no risk. No, the More Balls Than Brains Investment Club wants twenty percent, and you only get that in this scheme by selling $500,000 houses to ditch diggers.

So it was Romney who came up with the plan and Bush that devised the deregulatory environment that let it happen.

[hughee99]

10. If I'm not mistaken, much of the deregulation occured before Bush got into office.

And GM and Chrysler were already having issues before that even happened.

[jmowreader]

12. The most important piece happened under Bush

Bush signed the American Dream Downpayment Initiative in 2003, with the goal of putting 40,000 low-income people per year into mortgages. This law allowed the government to supply up to $10,000 in direct cash assistance to go toward down payments, closing costs and renovation expenses for people who couldn't afford those things on their own.

Clinton signed the Gramm-Leach-Bliley Act (which repealed the Chinese Walls between retail banking, investment banking and insurance) and the Commodity Futures Modernization Act (which banned regulating the derivatives business), but without the ADDI the people who were getting the liar loans, the NINJA loans, the balloon loans, and the other junk mortgages couldn't have afforded to go to the mortgage brokers in the first place.

The Republicans like to lay the blame for people taking out loans they couldn't afford on the borrowers...but ya know something? When you go to an office with a million bucks' worth of furniture in it and a woman who spent $5000 getting dressed and groomed this morning tells you that you can afford the house, YOU CAN AFFORD THE FUCKING HOUSE! Yes, people should have paid more attention to this but the bottom line is, people know banks are not in business to lose money and loaning it to someone who can't pay it back will cause that to happen. If they tell you something, most of us figure they know what they're talking about.

[1StrongBlackMan]

27. You neglected an important step ...

well ... a step repeat four times. Here, I'll add it for you:

1. Mortgage companies loan money to people to buy houses, and sell the mortgages to larger banks.

1.5. Take a fee.

2. Banks "tranche" the mortgages into derivatives called Mortgage-Backed Securities (MBS).

2.5. Take a fee.

3. They then tranche the MBS into derivatives called Collateralized Debt Obligations (CDO).

3.5. Take a fee.

4. They write a protective derivative called a Credit Default Swap (CDS) against the MBS, and tranche THOSE derivatives into new derivatives called Synthetic CDOs. (The best part: Synthetic CDOs can be written against MBS you don't even own!)

4.5. Take a fee.

[freshwest]

6. $284B in personal income is a stunning amount... America is not broke!

[mitty14u2]

8. Congress Should Stop Giving GM Funds, Republican Lawmakers Say 2009

Congress Should Stop Giving GM Funds, Republican Lawmakers Say

2009

Senator Richard Shelby, the top ranking Republican on the Banking Committee, said on ABC’s “This Week” program that“subsidization of anything for very long never works.”
“The automobile business -- those companies, Chrysler, Ford and General Motors -- they’re in deep trouble,” Shelby, of Alabama, said. “I’ve suggested they go into Chapter 11. That’s where they belong. And they could reorganize.”

House Minority Leader John Boehner said the government shouldn’t give GM any more money “until General Motors shows that they can be a viable company for the long term.”
“Anything short of that is just throwing good money after bad,” Boehner said on CBS’s “Face the Nation” program today.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aO9XkeRhiFLo

Republicans; God Knows we only Bail Out Banks and Wall Street, Those guys pay us well, GM, Ford they give us pittance compared to the Bribes from Wall Street Banking Lobbyists!

Greed is Good, The Republicans say they are closer to God and Family, Who’s God and Woes Family? Greed is the Root of all Evil unless its in favor of Big Banking!

[hughee99]

11. Isn't what Shelby suggested (Chapter 11) what President Obama ended up doing? n/t

[PoliticAverse]

13. Despite what many Duers seem to think, both GM and Chrysler did go through Chapter 11...

bankruptcy.

http://en.wikipedia.org/wiki/Chrysler_Chapter_11_reorganization

http://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization

[DallasNE]

15. Yes, But With A Twist

Banks were in the process of being bailed out themselves so there was no debtor-in-possession financing for a standard Chapter 11 so both GM and Chrysler would have been forced to close their doors. What Obama did was to use TARP funds for a government backed Chapter 11 so they could keep their doors open and come out the other side, which is exactly what happened.

[DCBob]

26. correct.. what Romney and the Rethugs were suggesting would not have worked..

they would have had to liquidate.

[PoliticAverse]

14. And to think some people say that corporate welfare is bad.. n/t

[Liberal_Stalwart71]

16. Wait! I thought Obama was Wall Street's "puppet"??

[cprise]

17. Wall St. banks were first in line for bailouts. n/t

[Liberal_Stalwart71]

18. That occurred under George W. Bush. Try again.

[cprise]

19. Both Bush and Obama.

But Obama had the distinction of granting bankers immunity from legal prosecution.

Try again indeed.

[Liberal_Stalwart71]

20. Listen, Obama will never be anywhere near Bush. No amount of ODS will change that.

Hate all you want, this president will be one of the greatest in the history of this Republic!

...and no matter how much you hate, this president saved the auto industry. Period!!

[cprise]

23. 'Better than Bush' doesn't necessarily mean Great.

If you want to do Obama's legacy any justice, stop using Bush as the yardstick to measure him.

Everything he's done so far is either a band-aid on the system or a license to the wealthy to continue their class warfare (keeping in mind he has to work with a hostile Congress). If he can get most of the judicial appointment backlog filled and do something about gerrymandering (e.g. fix the misrepresentation in Congress), then he will have made constructive contributions that will keep this country from unraveling.

[Liberal_Stalwart71]

28. He will be one of the greatest in history. Criticism and Bush notwithstanding!

[Brigid]

21. I'm not familiar with the details, but . . .

Could it be that, unlike the banks, the auto companies actually used the money to get back on their feet, while the banks used the money to pay bonuses to their execs?

[rafeh1]

22. gm bail out was nothing compared to wall st

gm bail out was nothing compared to wall st. Wall street got $700B+ at .50% interest. They promptly bought treasuries paying 2.1% and pocketed the difference.

Now their pet writers go around claiming the Wallst bail out was paid in full with interest whereas they stuck the fed with interest on difference of 1.5% on $700B for several years. A totoal loss of some $30B to $40B to the fed..

On anther note whatever happened to audit the fed movement..

[DCBob]

24. One can only imagine what Republicans would be saying if the bailouts had gone sour.

Most of those fuckers, especially the hard right, viciously opposed the President on the GM bailouts. Lest we never forget "Obama Motors".. or "Government Motors" headlines on Drudge. Now they are tripping over themselves trying to take credit.

[Elmergantry]

25. The bailouts were oligarchy at its finest.

One big fat wet sloppy tongue in mouth kiss of corporate welfare.

Fascism: Marriage of Govt with business.