Bailouts were profitable

[TexasTiger 12,828]

http://mobile.nytimes.com/2014/12/20/business/us-signals-end-of-bailouts-of-automakers-and-wall-street.html?referrer=&_r=0&referrer=

[homersapien 11,357]

I am tempted to go back and pull up some of the comments on the GM and Chrysler bail-outs. I guess "Government motors" wasn't such a stupid idea after all, huh?

[cooltigger21 0]

Taxpayer is still on the hook for over 20 billion of that. Worked great for the UAW not so much for the rest of us. Let these companies fail. The good parts will be taken by someone else. The rest will go by the way side as it should.

[Auburn85 432]

They should give back the auto bailout profits to the people they screwed and used as collateral(bondholders).

[japantiger 4,051]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

[TexasTiger 12,828]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

And prevented a depression.

[aubfaninga 16]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

And prevented a depression.

And what is so wrong with a country going into depression and bankruptcy????

I once heard a wise saying...

"Let these {countries} fail. The good parts will be taken by someone else. The rest will go by the way side as it should."

well maybe not those exact words

[homersapien 11,357]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

And prevented a depression.

Exactly. That was the primary motive for doing it.

[autigeremt 6,591]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

And prevented a depression.

Prove it.

[autigeremt 6,591]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

And prevented a depression.

Exactly. That was the primary motive for doing it.

The same thing has been said about all the Wall Street bailouts and how they saved the 401k's. I don't believe it's the taxpayers job to provide life preservers for fools but hey, it's water under the bridge.

[homersapien 11,357]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

And prevented a depression.

Exactly. That was the primary motive for doing it.

The same thing has been said about all the Wall Street bailouts and how they saved the 401k's. I don't believe it's the taxpayers job to provide life preservers for fools but hey, it's water under the bridge.

I agree.

On the other hand, if the government can take action that might prevent the economic system from collapsing altogether I think the responsible and dutiful thing to do is to take it.

Now the analysis of how we got ourselves into such a predicament and what should be done to prevent it in the future is a different discussion altogether. The same is true regarding how the bailout was handled, particularly regarding accountability.

[autigeremt 6,591]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

And prevented a depression.

Exactly. That was the primary motive for doing it.

The same thing has been said about all the Wall Street bailouts and how they saved the 401k's. I don't believe it's the taxpayers job to provide life preservers for fools but hey, it's water under the bridge.

I agree.

On the other hand, if the government can take action that might prevent the economic system from collapsing altogether I think the responsible and dutiful thing to do is to take it.

Now the analysis of how we got ourselves into such a predicament and what should be done to prevent it in the future is a different discussion altogether. The same is true regarding how the bailout was handled, particularly regarding accountability.

It will happen again in some form. It's a part of the cycle now. The next generation will have their own bubble.

[homersapien 11,357]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

And prevented a depression.

Exactly. That was the primary motive for doing it.

The same thing has been said about all the Wall Street bailouts and how they saved the 401k's. I don't believe it's the taxpayers job to provide life preservers for fools but hey, it's water under the bridge.

I agree.

On the other hand, if the government can take action that might prevent the economic system from collapsing altogether I think the responsible and dutiful thing to do is to take it.

Now the analysis of how we got ourselves into such a predicament and what should be done to prevent it in the future is a different discussion altogether. The same is true regarding how the bailout was handled, particularly regarding accountability.

It will happen again in some form. It's a part of the cycle now. The next generation will have their own bubble.

It sure looks that way to me too.

[DKW 86 7,419]

I am tempted to go back and pull up some of the comments on the GM and Chrysler bail-outs. I guess "Government motors" wasn't such a stupid idea after all, huh?

OMG, please get off the drugs!

From the article:

Although the overall bailout efforts turned a profit, the auto rescue did not. With Friday’s announcement, taxpayers were left with a $9.5 billion loss. Most of that came from General Motors, which paid back about $39 billion of the $49.5 billion invested.

We lost $10BN on a company with a market capitalization at the time of...$2BN. We could have bought GM 5X for what we LOST on the damn deal.

We could have had 5 Companies the size of GM running in the Auto or other industries!

homer, i have lost all (i mean ALL) respect for you. You obviously did not read the frickin article and you obviously cannot do simple math.

GM LOST $10BN.

100% OF THEIR STOCK ONLY TOTALED $2BN.

THEIR BOND HOLDERS AND VENDORS WERE LITERALLY SCREWED OVER.

IF GM WAS SOLD OFF, IT WOULD STILL BE AROUND BUT JUST OWNED BY DIFFERENT COMPANIES.

Elderly people lost huge chunks of the pensions and retirement holdings as they were declared worthless or next to worthless during the bankruptcy.

Total carnage was done to the retirements of GM workers and investors.

And all you can do is parrot the meaningless talking points.

homer, just stfu about stuff you obviously know nothing about and refuse to read or learn one damn thing about.

2<10

[DKW 86 7,419]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

You are being way too generous. Lets say we only make 4% per year interest.

At a minimum we should have made about $80BN on the deal.

This article is about trying to polish a turd. We lost tens of $BNs ($60BN maybe) on the deal if you really look at the sum total of it.

We now have legalized any corporate malfeasance that can be dreamed up because we have legitimized "TOO BIG TO FAIL/TOO BIG TO JAIL."

We hold no one accountable. We enacted only very very modest reforms that no one takes seriously.

We did not investigate a single scam artist or Wall Street Banking criminal.

How in @#$% some on this forum or any where else in the world can call this a good outcome totally escapes me. But hey, yall can keep polishing that turd for the rest of your worthless lives.

When it is all said and done and history is written, this one will be remembered as one of the worst things the federal govt ever did. It wiped out all accountability for corporate hacks in this nation.

You cannot undo the damage done here. When the next collapse comes, we will bail out the crazies and criminals once again. We will not jail nor even ask questions about it. We will just screw over the middle class again and again and again and have political hacks tell us how great it was that we screwed over the innocent and let the guilty go free.

[cooltigger21 0]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

You are being way too generous. Lets say we only make 4% per year interest.

At a minimum we should have made about $80BN on the deal.

This article is about trying to polish a turd. We lost tens of $BNs ($60BN maybe) on the deal if you really look at the sum total of it.

We now have legalized any corporate malfeasance that can be dreamed up because we have legitimized "TOO BIG TO FAIL/TOO BIG TO JAIL."

We hold no one accountable. We enacted only very very modest reforms that no one takes seriously.

We did not investigate a single scam artist or Wall Street Banking criminal.

How in @#$% some on this forum or any where else in the world can call this a good outcome totally escapes me. But hey, yall can keep polishing that turd for the rest of your worthless lives.

When it is all said and done and history is written, this one will be remembered as one of the worst things the federal govt ever did. It wiped out all accountability for corporate hacks in this nation.

You cannot undo the damage done here. When the next collapse comes, we will bail out the crazies and criminals once again. We will not jail nor even ask questions about it. We will just screw over the middle class again and again and again and have political hacks tell us how great it was that we screwed over the innocent and let the guilty go free.

you have to allow people to fail. GM wasn't criminal just poor management and planning. When people know that someone will bail them out if they screw up,they are much more likely to take unwise or even criminal actions.

[japantiger 4,051]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

You are being way too generous. Lets say we only make 4% per year interest.

At a minimum we should have made about $80BN on the deal.

This article is about trying to polish a turd. We lost tens of $BNs ($60BN maybe) on the deal if you really look at the sum total of it.

We now have legalized any corporate malfeasance that can be dreamed up because we have legitimized "TOO BIG TO FAIL/TOO BIG TO JAIL."

We hold no one accountable. We enacted only very very modest reforms that no one takes seriously.

We did not investigate a single scam artist or Wall Street Banking criminal.

How in @#$% some on this forum or any where else in the world can call this a good outcome totally escapes me. But hey, yall can keep polishing that turd for the rest of your worthless lives.

When it is all said and done and history is written, this one will be remembered as one of the worst things the federal govt ever did. It wiped out all accountability for corporate hacks in this nation.

You cannot undo the damage done here. When the next collapse comes, we will bail out the crazies and criminals once again. We will not jail nor even ask questions about it. We will just screw over the middle class again and again and again and have political hacks tell us how great it was that we screwed over the innocent and let the guilty go free.

you have to allow people to fail. GM wasn't criminal just poor management and planning. When people know that someone will bail them out if they screw up,they are much more likely to take unwise or even criminal actions.

both of you are spot on...but you left one thing out...punish the politicians who create the incentive system that makes it all possible. This loan fiasco was easy to see coming...but not a single reg or plan or oversight hearings process put in place to police the inevitable. And as you say, GM is a turd that just keeps stinking. And I still don't get how the original bond holders haven't sued for redress...

[homersapien 11,357]

I am tempted to go back and pull up some of the comments on the GM and Chrysler bail-outs. I guess "Government motors" wasn't such a stupid idea after all, huh?

OMG, please get off the drugs!

From the article:

Although the overall bailout efforts turned a profit, the auto rescue did not. With Friday’s announcement, taxpayers were left with a $9.5 billion loss. Most of that came from General Motors, which paid back about $39 billion of the $49.5 billion invested.

We lost $10BN on a company with a market capitalization at the time of...$2BN. We could have bought GM 5X for what we LOST on the damn deal.

We could have had 5 Companies the size of GM running in the Auto or other industries!

homer, i have lost all (i mean ALL) respect for you. You obviously did not read the frickin article and you obviously cannot do simple math.

GM LOST $10BN.

100% OF THEIR STOCK ONLY TOTALED $2BN.

THEIR BOND HOLDERS AND VENDORS WERE LITERALLY SCREWED OVER.

IF GM WAS SOLD OFF, IT WOULD STILL BE AROUND BUT JUST OWNED BY DIFFERENT COMPANIES.

Elderly people lost huge chunks of the pensions and retirement holdings as they were declared worthless or next to worthless during the bankruptcy.

Total carnage was done to the retirements of GM workers and investors.

And all you can do is parrot the meaningless talking points.

homer, just stfu about stuff you obviously know nothing about and refuse to read or learn one damn thing about.

2<10

First, this isn't about any profit the government made on the bailout.

http://www.slate.com...irrelevant.html

More importantly, you are conveniently leaving out the repercussions of the domino effect of bankruptcy throughout the vast supply chain of suppliers to GM and other manufacturers, including Ford.

http://www.bloomberg...ttner-says.html

Again, the conditions that created the "too big to fail" predicament is a different subject. At the moment the decision was made it would have been a far, far greater risk not to have done it.

As far as the bond holders, that comes under the way the bailout was handled which - as I said - is a fair subject for criticism.

Bottom line, the choices were between a GM bailout and the risk of an even deeper recession. And since the remedy for a recession is stimulus, using federal money - even 10 billion dollars - was a good decision to prevent it. We - and investors - would have spent a lot more if GM had gone under dragging the rest of the auto industry with it.

The auto industry is thriving today. To think that would be the case had GM gone under is fantasy. What is the value of a thriving auto industry to federal income?

[homersapien 11,357]

Only in government accounting could this possibly be considered a good use of $420b; 3% return after 6 years. The interest on the money we borrowed alone cost more than the $15b phantom profit...

You are being way too generous. Lets say we only make 4% per year interest.

At a minimum we should have made about $80BN on the deal.

This article is about trying to polish a turd. We lost tens of $BNs ($60BN maybe) on the deal if you really look at the sum total of it.

We now have legalized any corporate malfeasance that can be dreamed up because we have legitimized "TOO BIG TO FAIL/TOO BIG TO JAIL."

We hold no one accountable. We enacted only very very modest reforms that no one takes seriously.

We did not investigate a single scam artist or Wall Street Banking criminal.

How in @#$% some on this forum or any where else in the world can call this a good outcome totally escapes me. But hey, yall can keep polishing that turd for the rest of your worthless lives.

When it is all said and done and history is written, this one will be remembered as one of the worst things the federal govt ever did. It wiped out all accountability for corporate hacks in this nation.

You cannot undo the damage done here. When the next collapse comes, we will bail out the crazies and criminals once again. We will not jail nor even ask questions about it. We will just screw over the middle class again and again and again and have political hacks tell us how great it was that we screwed over the innocent and let the guilty go free.

you have to allow people to fail. GM wasn't criminal just poor management and planning. When people know that someone will bail them out if they screw up,they are much more likely to take unwise or even criminal actions.

True. Which is exactly why relaxing the regulations in the recent funding bill was such a crazy thing to do. Furthermore, there should have been criminal charges levied at executives in the investment banking business.

[homersapien 11,357]

"The Center for Automative Research said last year that the taxpayer bailout of GM saved 1.2 million jobs and avoided the loss of $129.2 billion in personal income in 2009 and 2010. Of the $78.2 billion the U.S. Treasury spent bailing out the auto industry through its Troubled Asset Relief Program, $58.0 billion was repaid, according to the report."

http://time.com/8295...s-11-2-billion/

[homersapien 11,357]

""Two consecutive executive administrations in Washington decided in late 2008 and early 2009 that the consequences of the potential losses and outcomes to the U.S. economy ... were worth avoiding through a federal intervention," Sean McAlinden, the center's chief economist, said in a statement.

"This peacetime intervention in the private sector by the U.S. government will be viewed as one of the most successful interventions in U.S. economic history," said McAlinden, who wrote the study along with Debra Maranger Menk.

CAR estimated that a complete shutdown of the industry that was bailed out in 2009 would have resulted in the loss of 2.63 million jobs and those losses would still have stood at more than 1.5 million in 2010. If only GM had been shut down, the job losses would have been almost 1.2 million in 2009, shrinking to 675,000 in 2010.

CAR estimated Treasury's final loss on the auto bailout at $13.7 billion, but that included a higher estimate of $11.8 billion related to its investment in GM. Monday's announcement put the GM loss at about $10.5 billion. At the same time, the bailout avoided the loss of $105.3 billion in unemployment benefit payments and the loss of personal and social insurance tax collections, according to CAR.

CAR said the study did not take into account the benefits of preserving the pensions of almost 600,000 GM and Chrysler retirees as well as industry research and development jobs. It also did not account for the psychological impact the collapse of GM and Chrysler would have had on the U.S. industrial base. "

http://www.nbcnews.c...ion-f2D11716261

[homersapien 11,357]

"What would have happened without the bailouts?

This is central to the election debate over the bailout. Mitt Romney claims that if GM and Chrysler Group had gone through a privately-financed bankruptcy process, they would have emerged even stronger than they are today.

But many auto industry experts, including the Obama administration's former car czar, Steven Rattner, a Democrat, and former GM Vice Chairman Bob Lutz, a Republican, say there was no private-sector financing available in 2009 and the bailout was the only way to keep the companies alive.

"He thinks we didn't try to borrow money from the banks?" Lutz told the Detroit Free Pressin February. "The banks were even more broke than we were. Who had the money?"

Without financing during bankruptcy, GM and Chrysler would have had to go out of business, taking down many suppliers. That would have likely caused bankruptcies at the healthier automakers such Ford Motor (F), who would not have been able to get the parts they needed to build cars. That is why

Ford went to Capitol Hill in late 2008 pushing for the rescue of its rivals.

The Center for Automotive Research, a well-respected Michigan think tank estimates that the bailout therefore saved 1.5 million U.S. jobs by keeping GM, Chrysler and the companies that depended on them in business.

Even if one assumes private financing could have been found, what's clear from Romney's own criticism of the bailout is that the autoworkers at GM and Chrysler today would have been far worse off today than they were with the bailout.

The pension plans for United Auto Workers union members at the companies were basically left untouched. It's likely that without Treasury financing those pension plans would have been dumped on the government pension agency, reducing payments to many retirees. Plus, automakers would have likely tried to cut wages in bankruptcy, as many companies do. That didn't happen during these bankruptcies since Treasury, not bankers, was calling the shots."

http://money.cnn.com...s/auto-bailout/

[homersapien 11,357]

Indeed. The auto bailouts were not speculative investments aimed at delivering a fat return to John Q. Public. They were designed to avoid an economic apocalypse that would have rivaled the Great Depression, especially in the industrial Midwest.

"I didn't want there to be 21% unemployment,” former President George W. Bush told the National Automobile Dealers convention in 2012, explaining why he initiated the auto bailout with $17.5 billion in bridge loans prior to Obama taking office in 2009.

The plan worked.

http://wardsauto.com...repaid-interest

[TexasTiger 12,828]

"What would have happened without the bailouts?

This is central to the election debate over the bailout. Mitt Romney claims that if GM and Chrysler Group had gone through a privately-financed bankruptcy process, they would have emerged even stronger than they are today.

But many auto industry experts, including the Obama administration's former car czar, Steven Rattner, a Democrat, and former GM Vice Chairman Bob Lutz, a Republican, say there was no private-sector financing available in 2009 and the bailout was the only way to keep the companies alive.

"He thinks we didn't try to borrow money from the banks?" Lutz told the Detroit Free Pressin February. "The banks were even more broke than we were. Who had the money?"

Without financing during bankruptcy, GM and Chrysler would have had to go out of business, taking down many suppliers. That would have likely caused bankruptcies at the healthier automakers such Ford Motor (F), who would not have been able to get the parts they needed to build cars. That is why

Ford went to Capitol Hill in late 2008 pushing for the rescue of its rivals.

The Center for Automotive Research, a well-respected Michigan think tank estimates that the bailout therefore saved 1.5 million U.S. jobs by keeping GM, Chrysler and the companies that depended on them in business.

Even if one assumes private financing could have been found, what's clear from Romney's own criticism of the bailout is that the autoworkers at GM and Chrysler today would have been far worse off today than they were with the bailout.

The pension plans for United Auto Workers union members at the companies were basically left untouched. It's likely that without Treasury financing those pension plans would have been dumped on the government pension agency, reducing payments to many retirees. Plus, automakers would have likely tried to cut wages in bankruptcy, as many companies do. That didn't happen during these bankruptcies since Treasury, not bankers, was calling the shots."

http://money.cnn.com...s/auto-bailout/

These guys don't do complexity.

[homersapien 11,357]

“Any complete cost-benefit assessment of the federal assistance to GM in its restructuring must consider the total net returns to the public investment…” researchers Sean McAlinden and Debra Maranger Menk wrote in “The Effect on the U.S. Economy of the Successful Restructuring of General Motors.”

“If the U.S. government had refused to assist (GM and Chrysler)… in a financial crisis of unprecedented proportions, then the whole U.S. economy was operating without a safety net, with the exception, of course, of the banking system,” McAlinden and Maranger Menk conclude. The center independently funded the new study as a follow up to a November 2008 analysis.

“The bottom line is that a failed GM would have left a lot of collateral damage,” said Karl Brauer, senior analyst at Kelley Blue Book. “Instead, GM is profitable, it’s making the best products in its 100-plus-year history, and it’s growing sales in the U.S. and globally. In looking at the recent history of government intervention, this one rates pretty well.”

http://www.forbes.co...round-any-more/