ONCE YOU UNDERSTAND HOW ILLEGAL THE GENERAL MOTORS BAILOUT WAS..You will Understand Obama's Not So Secret Connection with the UNIONS
THIS IS RICHARD TRUMKA...GOOGLE HIM !!
How did he get behind that podium ?
How did he get behind that podium ?
ONCE YOU UNDERSTAND HOW ILLEGAL THE GENERAL MOTORS BAILOUT WAS..You get an Understanding of the Obama Not So Secret Connection with the Unions and the Left is!! Please take the time to read this!!
Obama's General Motors [GM] Tarp Bailout - The Untold Details
Regardless of the GM bailout headlines proclaiming the staggering numbers, the real story of the government's bailout of GM, using TARP funds, is much more than just the billions of dollars involved. It is more importantly a story of governmental hubris that started with President Bush and the Republican Congress panicking and pandering to public fears, followed by President Obama and his administration - the Treasury Department in particular, skirting, or ignoring the rule of law to pursue a plan that was formulated based on political considerations rather than established contract law and sound economic procedures.
As a nation of laws, our problems with the GM bailout shouldn't be just the billions of taxpayer dollars used, they should also include the governmental bailout actions that broke whatever rules got in the way of their agenda, and, their intended efforts to deceive the public though misinformation and factual omission.
Bailing Out General Motors - The Background
First it should be noted that the General Motors bailout efforts also included Chrysler Corp. Although each have their own story details, the government actions to save the auto industry addressed many of the problems as being intertwined, and applied many solutions as common to both entities.
In late 2007, GM's financial situation was getting so bad that economists were ringing the alarm bells - warning of a possible collapse of the company. In 2008 those alarms became emergency sirens. General Motors could no longer avoid filing for bankruptcy, and it was doubtful that it could be a Chapter 11, or even a chapter 13 filing that would allow General Motors to reorganize and re-emerge as a new company - it would be a Chapter 7 filing - complete company liquidation; GM would perish as just one more failed company.
Americans, (and the world), were bombarded with Doomsday headlines: GM BANKRUPTCY TO COST 100,000's OF AMERICAN JOBS, GM COLLAPSE MEANS DEATH OF U.S. AUTO INDUSTRY, GOVERNMENT MUST SAVE GM TO SAVE U.S. ECONOMY
Bush was a lame-duck president when TARP, (Troubled Assets Relief Program), was created, (Bush's Treasury Secretary Henry Paulson's plan), to fight the crisis in the U.S. financial market. But he supported it, as did Congress, and incoming President Obama. It would be Obama's administration that would take over and administer the government's TARP efforts for the General Motors bailout.
Using TARP was seen as the only option to save GM. But there was a problem - this was the start of government's shenanigans in the GM bailout saga - TARP was legislatively created specifically for the financial market's crisis, and its use of funds was mandated for the purpose of buying troubled assets from financial institutions that would fail if they could not get rid of those toxic assets. Hence TARP. There were no provisions or authorities that would allow TARP to be used for a GM bailout. It would take more legislation from Congress to authorize such use.
But... there is always a but, the public was already screaming foul at Congress and the President over the daily headlines of how billions of dollars of TARP funds were going to favored financial institutions, overseas banks and investors, and worse - executive bonuses.
Both administrations knew Congress would not approve the needed legislation in the face of such a public outcry. So essentially, they agreed to just do it anyway. Of course they pointed to this paragraph or that in the TARP mandate, and stretched the meanings to, perhaps, technically authorize their use of TARP for a GM bailout. Several legal challenges were raised, (more on that later), and many legal experts opine that a court test would go against the administration's use of the funds.
Under the direction and control of Treasury Secretary Timothy Geithner, the Obama administration proceeded with the governmental bail-out plan for GM, (and Chrysler).
$51/$71/$81 Billion Taxpayer dollars go to save GM
Experts are still quibbling over the exact amount of taxpayer money that went into the GM bailout - but what's a few 10's of billions of dollars here and there.
Now we were bombarded with headlines touting the numbers: TARP TO SPEND $8 BILLION TO SAVE GM - GOVERNMENT GIVES GM $51 BILLION... and on and on.
Everyday was a new "billions" number - with a different explanation for its need or use: $11 billion to keep small parts supply-chain companies in business, $21 billion to see GM through bankruptcy proceedings, $10 billion for this, $20 billion for that... pretty soon we were inured to the numbers. A billion dollars used to be a bunch of money, period! But with these kind of numbers in the headlines weekly - they seemed to become just more scoreboard entries than actual dollar amounts.
Some generally excepted Tarp Fund Bailout numbers...
The General Motors Bankruptcy Plan
Details of the government's involvement in, and approval of, GM's bankruptcy plan, (formulated by Treasury Secretary Geithner, the Auto Worker's Unions, (UAW), and technically GM's management), that was submitted to the Bankruptcy Court for approval, were the determining factors deciding whether GM would be forced to liquidate, or allowed to file under Chapter 11 terms and emerge from the filings as a new company - to continue business.
But in fact, it was a completely new process that the bankruptcy courts had never dealt with before - a government-subsidized reorganization plan that the court could only tinker with, and then rubber-stamp its approval.
The winners and losers of the Government's plan for GM bankruptcy hearing
This is where the administration shows its true colors.
The deception and misinformation begins
It all started with a statement by President Obama, to paraphrase: We do not want to be involved in the day to day operations and decisions of the New GM, and we have no intention of micro-managing their new executive team.
But....
The administration forced out the CEO of General Motors, Rick Wagoner
FOIA, (Freedom of Information Act), filings found that GM’s TV ad campaign last year that misleadingly* claimed that the company had paid back its government loan in full was approved by the administration. They also uncovered e-mails between GM CEO Ed Whitacre and various Treasury and other federal officials a month in advance of GM’s announcement of TARP loan repayments. These emails included draft schedules, draft remarks to be given by Mr. Whitacre, and draft press releases from both GM and the Treasury Department.
*GM did not payback the TARP loans as their announcement appeared to say. They only paid back one particular loan package of $6.7 billion - not the $49.5 billion the announcement implied. Even worse was that GM also did not repay the loan with monies and profits from the newly invigorated company - they paid it back with more TARP funds from another TARP escrow account, none of the repayment funds came from GM monies.
And Obama's administration knew this, and as shown above, actually helped compose and orchestrate the public announcements that deceived the public.
The Obama administration also took to the airwaves, proclaiming GM's announcement of 2011 1st quarter profits of $3.7 billion dollars, as proof of the success of their bailout efforts in saving the auto industry. President Obama even held a press conference to proclaim this as a sign of of the success of his administrations bailout efforts.
But, it wasn't true. $1.5 billion of that $3.7 billion came directly from the spin-off sale of GM's Delphi group, and a couple other smaller business units, and had nothing to do with sales and operational profits.. Leaving a real operational profit of only $1.2 billion, which was less than Ford's "non-government" assisted profits for the same quarter. The $1.2 billion number was even more misleading because it did not include any tax costs, (but Ford's numbers did), due to the $45 billion tax-loss "gift" the bankruptcy court allowed GM to carry forward onto the new company's books.
Finally - was the bailout really needed....
There has been much said for and against the need for the General Motors bailout.
Public officials from many auto industry-related organizations, the Obama administration - from the top down, and with very few exceptions - most members of Congress, all proclaimed that GM was too big to be allowed to fail. Too many jobs, (100,000's, and hundreds of small support businesses), would be lost, and too much of our economy depended on the survival of GM. Failure would be so catastrophic that not only would it undo all that had been done to save our financial markets, it would topple other segments of our economy - like dominoes, right down to the mom and pop diners that depended on auto industry worker's lunch money.
This may be true, had GM been forced to liquidate, and completely cease operations.
Maybe, but, there are other very knowledgeable business and bankruptcy experts that have different opinions. Many believe GM would have been granted Chapter 11 status without government intervention. They believe this would have been much more beneficial to both the company and our economy.
They believe bankruptcy would have allowed GM to:
Todd Zywicki, a bankruptcy expert at George Mason University, highly doubts that GM would have faced liquidation. Because the company was financially distressed—after years of poor management—but not economically nonviable, in short - just the type of situation the bankruptcy laws were designed for. If GM had put together a credible restructuring plan, it would have been able to obtain debtor-in-possession financing under which, as the name suggests, the debtors would have essentially possessed the company. But it would have been allowed to emerge as a more streamlined entity. Without needing $49.5 billion +/- of the taxpayer's dollars.
If Todd, and other similar bankruptcy law experts are correct, then why was the Obama administration so focused on a bailout-only solution?
Could it be because the unions would have stood in line just like the rest of the creditors? Or because the bankruptcy court would have voided all labor union contracts, allowing GM to start fresh negotiations with the unions - without the legacy burdens already in the contracts, ($70 per hour, $12-$14 per hour more than GM's competitors)? Or because it would have allowed GM to streamline and re-negotiate its dealership program contracts, (almost ALL auto industry experts agree GM's dealership program was over-saturated - supporting too many dealerships was another major cost driving the company's profits down), which realistically GM could not accomplish due to local political influence that in turn became Congressional political influence?
We may never know for sure. Or as the bankruptcy experts indicated, when more behind-the-scenes details are discovered, we may find out this was a case of political manipulation and deception on the grandest scale ever seen in our country's economic history.
But of course, you may have a different perspective, especially if you are a member of one of the AWU's, (like the UAW).
Footnote: As of the 2011 4th quarter, the New GM has made no further TARP loan repayments.
Source http://gaanderson.hubpages.com/hub/Obama-General-Motors-GM-Tarp-Bailout-Untold-Details
So much of the GM bailout effort was done behind political doors that it really wasn't clear what was what - until after the fact. As more details became public, and more contract and bankruptcy lawyers and experts weighed in it became less certain that the "Doomsday" scenario was accurate.
1. GM's position did not meet the criteria of a nonviable business - which would only merit a Chapter 7 filing
2. previous bankruptcy rulings indicate pension obligations would have received priority consideration, but behind secured creditors (as required by contract law - not just tossed out the door
3. A viable reorganization plan would have merited government-backed loan guarantee support, just not the massive hand-outs the bailout provided
4. Many experts point to the numerous successful major airlines bankruptcy reorganizations as examples of how the proceedings could have worked - almost an apples to apples comparison.
but alas, now it just stands as one more example of inept government meddlingTHIS IS THE SOCIALIST MEDDLING BY THE OBAMA CABNAL IN CAHOOTS WITH THEIR INION THUG BOSSES !!
Obama's General Motors [GM] Tarp Bailout - The Untold Details
Regardless of the GM bailout headlines proclaiming the staggering numbers, the real story of the government's bailout of GM, using TARP funds, is much more than just the billions of dollars involved. It is more importantly a story of governmental hubris that started with President Bush and the Republican Congress panicking and pandering to public fears, followed by President Obama and his administration - the Treasury Department in particular, skirting, or ignoring the rule of law to pursue a plan that was formulated based on political considerations rather than established contract law and sound economic procedures.
As a nation of laws, our problems with the GM bailout shouldn't be just the billions of taxpayer dollars used, they should also include the governmental bailout actions that broke whatever rules got in the way of their agenda, and, their intended efforts to deceive the public though misinformation and factual omission.
Bailing Out General Motors - The Background
First it should be noted that the General Motors bailout efforts also included Chrysler Corp. Although each have their own story details, the government actions to save the auto industry addressed many of the problems as being intertwined, and applied many solutions as common to both entities.
In late 2007, GM's financial situation was getting so bad that economists were ringing the alarm bells - warning of a possible collapse of the company. In 2008 those alarms became emergency sirens. General Motors could no longer avoid filing for bankruptcy, and it was doubtful that it could be a Chapter 11, or even a chapter 13 filing that would allow General Motors to reorganize and re-emerge as a new company - it would be a Chapter 7 filing - complete company liquidation; GM would perish as just one more failed company.
Americans, (and the world), were bombarded with Doomsday headlines: GM BANKRUPTCY TO COST 100,000's OF AMERICAN JOBS, GM COLLAPSE MEANS DEATH OF U.S. AUTO INDUSTRY, GOVERNMENT MUST SAVE GM TO SAVE U.S. ECONOMY
Bush was a lame-duck president when TARP, (Troubled Assets Relief Program), was created, (Bush's Treasury Secretary Henry Paulson's plan), to fight the crisis in the U.S. financial market. But he supported it, as did Congress, and incoming President Obama. It would be Obama's administration that would take over and administer the government's TARP efforts for the General Motors bailout.
Using TARP was seen as the only option to save GM. But there was a problem - this was the start of government's shenanigans in the GM bailout saga - TARP was legislatively created specifically for the financial market's crisis, and its use of funds was mandated for the purpose of buying troubled assets from financial institutions that would fail if they could not get rid of those toxic assets. Hence TARP. There were no provisions or authorities that would allow TARP to be used for a GM bailout. It would take more legislation from Congress to authorize such use.
But... there is always a but, the public was already screaming foul at Congress and the President over the daily headlines of how billions of dollars of TARP funds were going to favored financial institutions, overseas banks and investors, and worse - executive bonuses.
Both administrations knew Congress would not approve the needed legislation in the face of such a public outcry. So essentially, they agreed to just do it anyway. Of course they pointed to this paragraph or that in the TARP mandate, and stretched the meanings to, perhaps, technically authorize their use of TARP for a GM bailout. Several legal challenges were raised, (more on that later), and many legal experts opine that a court test would go against the administration's use of the funds.
Under the direction and control of Treasury Secretary Timothy Geithner, the Obama administration proceeded with the governmental bail-out plan for GM, (and Chrysler).
$51/$71/$81 Billion Taxpayer dollars go to save GM
Experts are still quibbling over the exact amount of taxpayer money that went into the GM bailout - but what's a few 10's of billions of dollars here and there.
Now we were bombarded with headlines touting the numbers: TARP TO SPEND $8 BILLION TO SAVE GM - GOVERNMENT GIVES GM $51 BILLION... and on and on.
Everyday was a new "billions" number - with a different explanation for its need or use: $11 billion to keep small parts supply-chain companies in business, $21 billion to see GM through bankruptcy proceedings, $10 billion for this, $20 billion for that... pretty soon we were inured to the numbers. A billion dollars used to be a bunch of money, period! But with these kind of numbers in the headlines weekly - they seemed to become just more scoreboard entries than actual dollar amounts.
Some generally excepted Tarp Fund Bailout numbers...
- $49.5 Billion - Conservative agreement of total TARP funds loaned or given to GM
- $30.1 Billion - Government purchase of GM stock - GM did not have enough financing to support a re-organization plan a bankruptcy court could accept, (or so it was stated), so to get the money, the U.S. Government gave GM $30.1 billion dollars in exchange for 60% ownership of the New GM company
- *note: many sources add this to the TARP GM loans amounts to arrive at a total of taxpayer-funded loans to the GM bailout - to come up with the big $77 or $81 billion dollar numbers, but this is not correct, the $30.1 billion is not a loan that can be repaid - it can only be recovered through the sale of the government's interest in GM ownership.
The General Motors Bankruptcy Plan
Details of the government's involvement in, and approval of, GM's bankruptcy plan, (formulated by Treasury Secretary Geithner, the Auto Worker's Unions, (UAW), and technically GM's management), that was submitted to the Bankruptcy Court for approval, were the determining factors deciding whether GM would be forced to liquidate, or allowed to file under Chapter 11 terms and emerge from the filings as a new company - to continue business.
But in fact, it was a completely new process that the bankruptcy courts had never dealt with before - a government-subsidized reorganization plan that the court could only tinker with, and then rubber-stamp its approval.
The winners and losers of the Government's plan for GM bankruptcy hearing
This is where the administration shows its true colors.
- U.S. Government buys 60% share of the New GM company for $30.1 billion - giving GM the necessary "debtor in possession" funds reserve that the court required in order to consider a Chapter 11 filing
- The AWU's, (UAW), received a 17% ownership stake in GM, (65% in Chrysler), in lieu of the money GM owed for union health and pension commitments. At the time this equated to about 40 cents on the dollar, but in reality stock shares could be sold at levels that would not only make the health and pension funds whole - but possibly generate a profit. *Note: Unions made an initial stock sale, (a portion of their shares), right after the IPO, at a rate that generated a $4 billion profit to the funds
- Private secured investors were given a settlement agreement at the rate of 29 cents on the dollar *Note: these "private investors" also included investment funds composed of other union pension funds, like the Federated Teachers Association - which naturally screamed murder and went to court - where they failed to find relief - looks like the Obama administration and the UAW had more clout. THIS WAS UNPRECEDENTED IN CONTRACT LAW WHERE SECVURED CREDITORS WERE GIVE SECOND POSITION!!
- **It should be noted that established contract law required secured creditors be paid first, but Obama's administration simply ignored this legal requirement and gave the unsecured union creditors first position - leaving whatever might be left for the secured investors.
- Common-share stock holders were completely wiped out, when GM emerged from bankruptcy, all shares in the "old" GM were worthless since the "old" GM didn't exist anymore
- GM was allowed to retain a $45 billion business-loss tax credit, carried forth from the "old" GM to the "New" GM - a practice unheard of in bankruptcy proceedings, essentially adding a $45 billion "gift" to off-set tax liabilities of the new company.
- Delphi, a parts supplier network and GM spinoff, had all GM debt to it cancelled. Treasury Secretary Timothy Geithner also decided to cut pensions liabilities for salaried non-union employees to expedite GM’s emergence from bankruptcy.
The deception and misinformation begins
It all started with a statement by President Obama, to paraphrase: We do not want to be involved in the day to day operations and decisions of the New GM, and we have no intention of micro-managing their new executive team.
But....
The administration forced out the CEO of General Motors, Rick Wagoner
FOIA, (Freedom of Information Act), filings found that GM’s TV ad campaign last year that misleadingly* claimed that the company had paid back its government loan in full was approved by the administration. They also uncovered e-mails between GM CEO Ed Whitacre and various Treasury and other federal officials a month in advance of GM’s announcement of TARP loan repayments. These emails included draft schedules, draft remarks to be given by Mr. Whitacre, and draft press releases from both GM and the Treasury Department.
*GM did not payback the TARP loans as their announcement appeared to say. They only paid back one particular loan package of $6.7 billion - not the $49.5 billion the announcement implied. Even worse was that GM also did not repay the loan with monies and profits from the newly invigorated company - they paid it back with more TARP funds from another TARP escrow account, none of the repayment funds came from GM monies.
And Obama's administration knew this, and as shown above, actually helped compose and orchestrate the public announcements that deceived the public.
The Obama administration also took to the airwaves, proclaiming GM's announcement of 2011 1st quarter profits of $3.7 billion dollars, as proof of the success of their bailout efforts in saving the auto industry. President Obama even held a press conference to proclaim this as a sign of of the success of his administrations bailout efforts.
But, it wasn't true. $1.5 billion of that $3.7 billion came directly from the spin-off sale of GM's Delphi group, and a couple other smaller business units, and had nothing to do with sales and operational profits.. Leaving a real operational profit of only $1.2 billion, which was less than Ford's "non-government" assisted profits for the same quarter. The $1.2 billion number was even more misleading because it did not include any tax costs, (but Ford's numbers did), due to the $45 billion tax-loss "gift" the bankruptcy court allowed GM to carry forward onto the new company's books.
Finally - was the bailout really needed....
There has been much said for and against the need for the General Motors bailout.
Public officials from many auto industry-related organizations, the Obama administration - from the top down, and with very few exceptions - most members of Congress, all proclaimed that GM was too big to be allowed to fail. Too many jobs, (100,000's, and hundreds of small support businesses), would be lost, and too much of our economy depended on the survival of GM. Failure would be so catastrophic that not only would it undo all that had been done to save our financial markets, it would topple other segments of our economy - like dominoes, right down to the mom and pop diners that depended on auto industry worker's lunch money.
This may be true, had GM been forced to liquidate, and completely cease operations.
Maybe, but, there are other very knowledgeable business and bankruptcy experts that have different opinions. Many believe GM would have been granted Chapter 11 status without government intervention. They believe this would have been much more beneficial to both the company and our economy.
They believe bankruptcy would have allowed GM to:
- Start with a clean slate in union negotiations - relieving them of the legacy burdens of unaffordable union health and benefits costs that were one of the major contributors to their need for bankruptcy protection
- Negotiate new union wage contracts that were more realistic and in-line with other auto maker's cost - thus allowing them to be better positioned to be competitive. Industry average union wages are $56-$58 per hour, (including benefits costs), GM's union wage costs were $70 per hour
- Follow other typical Chapter 11 re-emergence efforts, like; shedding unprofitable parts of the company, (lie. streamlining it's bloated dealerships program), re-negotiate cost-prohibitive contractual obligations, and more...
Todd Zywicki, a bankruptcy expert at George Mason University, highly doubts that GM would have faced liquidation. Because the company was financially distressed—after years of poor management—but not economically nonviable, in short - just the type of situation the bankruptcy laws were designed for. If GM had put together a credible restructuring plan, it would have been able to obtain debtor-in-possession financing under which, as the name suggests, the debtors would have essentially possessed the company. But it would have been allowed to emerge as a more streamlined entity. Without needing $49.5 billion +/- of the taxpayer's dollars.
If Todd, and other similar bankruptcy law experts are correct, then why was the Obama administration so focused on a bailout-only solution?
Could it be because the unions would have stood in line just like the rest of the creditors? Or because the bankruptcy court would have voided all labor union contracts, allowing GM to start fresh negotiations with the unions - without the legacy burdens already in the contracts, ($70 per hour, $12-$14 per hour more than GM's competitors)? Or because it would have allowed GM to streamline and re-negotiate its dealership program contracts, (almost ALL auto industry experts agree GM's dealership program was over-saturated - supporting too many dealerships was another major cost driving the company's profits down), which realistically GM could not accomplish due to local political influence that in turn became Congressional political influence?
We may never know for sure. Or as the bankruptcy experts indicated, when more behind-the-scenes details are discovered, we may find out this was a case of political manipulation and deception on the grandest scale ever seen in our country's economic history.
But of course, you may have a different perspective, especially if you are a member of one of the AWU's, (like the UAW).
Footnote: As of the 2011 4th quarter, the New GM has made no further TARP loan repayments.
Source http://gaanderson.hubpages.com/hub/Obama-General-Motors-GM-Tarp-Bailout-Untold-Details
So much of the GM bailout effort was done behind political doors that it really wasn't clear what was what - until after the fact. As more details became public, and more contract and bankruptcy lawyers and experts weighed in it became less certain that the "Doomsday" scenario was accurate.
1. GM's position did not meet the criteria of a nonviable business - which would only merit a Chapter 7 filing
2. previous bankruptcy rulings indicate pension obligations would have received priority consideration, but behind secured creditors (as required by contract law - not just tossed out the door
3. A viable reorganization plan would have merited government-backed loan guarantee support, just not the massive hand-outs the bailout provided
4. Many experts point to the numerous successful major airlines bankruptcy reorganizations as examples of how the proceedings could have worked - almost an apples to apples comparison.
but alas, now it just stands as one more example of inept government meddlingTHIS IS THE SOCIALIST MEDDLING BY THE OBAMA CABNAL IN CAHOOTS WITH THEIR INION THUG BOSSES !!
Calll in the PATRIOT POSSE...WE CAN CHANGE THIS !!
