Wednesday

U.S. ‘unlikely’ to recoup auto outlay, panel finds. DUH!


U.S. ‘unlikely’ to recoup auto outlay, panel finds
Congressional oversight report urges more transparency from the Treasury


This has to be the biggest BFO (blinding flash of the obvious) of the year. Had the congress been pressed a litter harder towards foresight this oversight may not have seemed so much like disinterested hindsight.

Now congress seems intent on the transparency that was so clearly lacking when this bill was assembled piecemeal along with its counterparts. I get the distinct feeling that this is less a case of diligent oversight and more a case of covering their collective snowy white asses against the coming November storms.


The article asserts:


WASHINGTON - The federal government is unlikely to recoup all of the billions of dollars that it has invested in General Motors and Chrysler, according to a new congressional oversight report assessing the automakers' rescue.


The report said that a $5.4 billion portion of the $10.5 billion owed by Chrysler is "highly unlikely" to be repaid, while full recovery of the $50 billion sunk into GM would require the company's stock to reach unprecedented heights.


Duh! This was a foregone conclusion that conveniently disappeared into the background under the din of “bankruptcy means an end to US auto manufacturers”. Amazingly enough the cry for responsibility was accompanied into the abyss by taxpayer money and congressional accountability.


"Although taxpayers may recover some portion of their investment in Chrysler and GM, it is unlikely they will recover the entire amount," according to the report, which is scheduled to be released Wednesday.


The report also recommended that the Treasury Department act with more transparency and provide a legal analysis justifying the use of financial rescue funds for the automakers. The report was prepared by the Congressional Oversight Panel, which is overseeing the federal bailout programs.


In all, the government has invested $74 billion in the nation's auto industry, including $12.5 billion into auto financing giant GMAC and $3.5 billion into auto suppliers, according to the report.


Money well spent as it apparently averted the dreaded bankruptcies that would have sent the economy into a death spiral; wait didn’t they go bankrupt anyway?


Catastrophe averted?


The panel said the government may have averted economic catastrophe by taking on the rescue. The automotive industry represents about 6.5 percent of the manufacturing jobs in the United States. "Preserving portions of Chrysler and General Motors might have resulted in savings for the government in other ways," the report said.


This defies logic. The bailout was supposed to avert bankruptcies which happened anyway and now the government is trying to take credit for dumping billions of dollars into the failing industry that failed anyway? Explain, please, how any catastrophe was averted, especially the loss of billions of taxpayer dollars. I will wait….


GM issued a statement Tuesday night saying that it was a stronger company than it was before its bankruptcy filing and government rescue. "We are confident that we will repay our nation's support because we are a company with less debt, a stronger balance sheet, a winning product portfolio and the right size to match today's market realities," it said.


They will repay the nation’s support; conspicuously missing is a promise to repay its money as well.


The panel also addressed complaints that the government-led bankruptcy proceedings for the two automakers set precedents that could make investors wary. In each case, many investors were wiped out or took substantial losses. But the panel said it is difficult to predict what effect the bankruptcies may have on investment decisions.


"Academics and practitioners with whom the Panel's staff have spoken seem to believe that it is both too early and, given the number of variables, perhaps not possible to conclude one way or another as to what effect the government's involvement in the Chrysler bankruptcy will have on credit markets going forward," the report said.


It’s likely to encourage more ill-advised behavior considering the government has effectively removed the specter of failure. Hey guys do what you want; we’ve got your backs.


Similarly, it said it was difficult to determine whether, as critics have charged, the bankruptcies were unusually abrupt or punishing to creditors.


They were definitely punishing to taxpayers who footed the bill. Creditors and union flunkies got off pretty good by comparison.

"Because there is no one-size-fits-all bankruptcy for multi-billion dollar companies, it is difficult to categorize the Chrysler and GM bankruptcies as being either typical or atypical," it said.


The panel adopted the report on a 2 to 1 vote. Rep. Jeb Hensarling (R-Tex), the lone member of Congress on the panel and a staunch opponent of the auto industry rescue, voted against the report's findings. He accused the Obama administration of using the auto bailout, which began under the Bush administration, "to orchestrate the bankruptcies of Chrysler and GM so as to promote its economic, social and political agenda."


"By making such an unprecedented investment in Chrysler and GM, the Administration by definition chose not to assist other Americans that are in need," he said in a statement. "With the economic suffering the American taxpayers have endured during the past two years one wonders why Chrysler and GM merited such generosity to the exclusion of other taxpayers."


It does make one wonder doesn’t it?

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