GM? Today they get their final lifeline… 30 billion more in Taxpayer dollars, but still bankrupt:
But the officials said Sunday they would try to steer clear of getting involved in the automaker’s day-to-day operations, though the government will maintain the right to set upfront conditions for providing assistance in “exceptional cases.”
The administration expects company CEO Fritz Henderson will continue to serve in that capacity, officials said, though they added that Henderson serves at the pleasure of the board — some of whose members would be replaced. Those new members have not yet been identified, though administration officials said there would be some continuity between the old GM and the new GM.
The administration said it will also avoid involvement in determining which dealerships are closed as the automaker continues downsizing, nor will the administration seek to name members to an oversight board determining the company’s compensation for executives.
Also, just a couple of things to remember if you are seeing the astroturf spam about “Republican Dealers being picked on” that’s been making the rounds the past two weeks:
Correlation is not cause
88 percent of Car Dealers are Republican donors anyway, a strong correlation was bound to be there, if they didn’t find a strong majority of Republicans in the data, something would be wrong. The difference between 92 percent and 88 percent is statistically insignificant with the small sample size of closing dealers.
Obama’s Open Government: Release Abu Ghraib Photos but No Visibility to Tarp Funds
I would laugh, but it’s not funny. President Obama is still waffling on releasing Abu Ghraib photos five years after the fact, and closing Gitmo, but at the same time the American public has pretty much zero visibility to where Tarp money is going, where auto bailout money went, or analysis of how the coming climate legislation is expected to affect them economically.
While Al Qaeda in Iraq is trying their own “Re-surge” with a spate of suicide bombing aimed at reopening sectarian conflict our President proposed releasing five year old photos that are certain to enrage now calm militias in Baghdad.
How is it open to propose then revoke on Gitmo, Abu Ghraib, and Tarp? The American public is certainly more interested in how the government is spending Trillions in their tax dollars and managing the offshore loans against our future.
We have no clear policy directions on Iraq, Afghanistan, Iran, North Korea, Venezuela, and Pakistan yet. How open is that?
We don’t know when taxes will be added, or what taxes will be added – how open is that? We don’t know whether the Bush tax-cuts will expire, how open is that? ( knowing the tax structure in advance is critical to planning most medium to large business’ in the US. Most of the bean-counters still don’t know what to plan for two to three years out and it’s crippling our ability to grow the economy back.)
This isn’t open government, it’s posture and charade.
The notoriously liberal McClatchey papers are trying to cover up some of the guilt of Fannie Mae and by the secondary effect, some of their legislative supporters in Washington like Barney Frank and Christopher Dodd.
They print a few facts about the industry, but gloss over the real problems created by the loosy-goosey Government Sponsored Enterprises. Specifically these bullets from the article are somewhat factual, but leave out things:
_ More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. [ true, but they wouldn’t do it if they didnt’ think a market was there – without Fannie and Freddie Securitizing these no sane lending instition would have dumpster dived the bad credit market the way they have the past decade.]
_ Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. [Of course they did, see comment above]
_ Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics. [ no, companies like Greentree, Canseco, Countrywide and others who created the chain of processing, sales, and servicing firms tried to comply with those federal guidelines because if they didn’t they couldn’t expand or compete with the big-box banks in products in some states and it was all about volume as well as secondary goals like selling contractor homes.]
Basically Fannie was worse than Freddy, Freddy had higher standards, and higher fees. By leading the way to the bottom in standards and raising their caps the highest Fannie led directly to this mess. If you had some toxic waste on the books you had to carry because no loan servicer would buy it who cared? Fannie or Freddy were securitizing it right?
This atmosphere of churn and burn and increasing volume led to a cuthroat business in refinancing and sales where overnight mortgage giants were racing each other to see who could dive the deepest in the credit barrel the fastest to cut into the big box bank’s turf.
Loan officers didn’t care, they got commission good or bad. Underwriters across the country were browbeaten until they learned to hold their nose and look the other way. In the meantime to keep up banks were sending out people with cameras to take pictures of huge sums of money laid out bill by bill on kitchen floors because there were “cultural differences” and some cultures didn’t trust banks (meanwhile on the counter there were labratory quality scales and packaging material…) Processing was outsourced to third parties with even lower standards because the onboard staff couldn’t keep up with the glut, and automated online processing raised their profit margins.The processing outfits got paid by number of loans processed, so it was rare to reject. Non-Traditional lenders were knife-fighting to gain major contractor’s business, and in some offices on the same computer that held the loan forms you would find the home office software to print up fake W-2’s. If you needed more money than your home was really worth on a refi package, there were specialty appraisers who would inflate the value to meet the needs.
Fly by nights came and went, and their loans got sold, repackaged, sold again. Massive fraud started occurring in some rescue agencies, some sponsored by ACORN. Straw buyer schemes, fractional deeds, and rescue angels who turned demonic all flourished. It all floated downstream to Fannie in the end because they blazed the path to lower standards and larger subprime loans. You only have to think about it a minute: Have you ever seen the government do anything where there wasn’t massive fraud and bilking? The GSE’s have been the loss leaders in today’s financial crisis, and it was truly congress and the GSE’s who led down that path into vallies of vultures by opening markets that shouldn’t have existed in the first place.
Do you think Obama isn’t neck deep with the community organizations who led to the lowering of standards and the raising of caps? Do you think Urban Democrats didn’t use these groups to increase their vote blocks?
The new plan puts caps on exective pay and golden parachutes, it also allows foreclosures to proceed (and this is a must – some people have walked away from their homes,) and it stops money from going to Acorn and other Democrat activist groups that led us to this crisis. So on the surface it looks good.
Over the next thirty years many of these mortgages will be paid off, producing potential profit, and those that aren’t are still backed by houses and property in the US, still one of the best countries in the world to live in. The bill will be posted for 24 hours before the vote, and you can bet that bloggers will be going over it with a fine tooth comb. I intend to read it, but won’t plan on commenting unless there is something egregiously wrong with it (beyond just the fact that we have to do this.)
Right now on paper these bundles of mortgages appear to have little value, but over time they will regain their worth. The similar period we saw in Japan took about ten years, if we build the energy sources we need and build our economy it could happen quicker than that here.
Much more on the deal at Washington Post:
The money would be dispersed in segments, with Paulson receiving $250 billion immediately, $100 billion upon White House certification of its necessity and the final $350 billion only after Congress has been given 15 days to object.
Firms participating in the bailout would be required to grant the government warrants to obtain nonvoting shares of stock, so taxpayers can benefit if the companies return to profitability.
Firms taking advantage of the bailout would be required to limit compensation for senior executives, with especially severe limits on “golden parachutes” at failing firms. The compensation limits will be enacted primarily, but not solely, through the tax code by reducing tax deductions for firms that pay executives more than $400,000 a year.
I like it that they are metering the money with checkpoints, I like it that there are these and other limits. What I don’t like is that there will be fees on the financial services industry as part of the agreement if they don’t turn this around in five years. Without seeing the details of how this all knits together, it’s really impossible to comment more on the plan. I await the posting of it.
In this brief interview you will see Baitullah Mehsud, leader of TTP, or Pakistan’s Taliban, deny the assasination of Benazir Bhutto (methinks he doth protest too oft and too much…) as well as praise Bin Laden. He states that Bin Laden is not “in this region”, but they would do whatever he asks.
Then he goes on to exhort the Pakistan government to use their Nuclear power against the enemies, later he identifies the enemies of their Jihad as Christians and Jews.
Keep in mind that Baitullah is a well practiced liar and manipulator — way back during the putsch of Uzbeks in his region he had me hoping that he was actually anti-AQ. That hope was false, and like the rest of the Neo-Takfirist Pashtun Jihadis in Pakistan, he is their lapdog.