Filed under: Government/Legal, GM, Earnings/Financials
GM (sorta) denies seeking $5 billion direct loan from feds to stay afloat
A report by Barron's over the weekend cited (again) two unnamed sources that divulged General Motors has been after a loan from the Federal Reserve since last September. The Barron's article got somewhat specific about the unspecifics, namely how much, saying that the amount the General is after is unknown, "but it needs $5 billion to meet its goal of completing a $15 billion liquidity program, which actually is coming from cost cuts."Reuters (via Automotive News) reports that GM isn't after the fed's cash, but isn't averse to the idea or "taking dramatic steps" to make ends meet during these tumultuous times.
GM spokesperson, Greg Martin, said that the automaker isn't "actively pursing" the loans, but "you really can't rule out anything." M-kay.
[Source: Barrons, Reuters, Automotive News – Sub. Req.]
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Reader Comments (Page 1 of 1)
BrianFL 10:30AM (10/13/2008)
Before the haters arrive, companies in all industries of our economy have always seeked government backed loans to stay afoat and develope new technologies.
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Andy 10:39AM (10/13/2008)
Especially when that same government (via CAFE regulation) is asking them to completely change the way they do business.
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Ayatollah Rodriguez 11:19AM (10/13/2008)
Nicotine is bad for public, should the government give Big Smoke gov backed loans to develop nicotine and tar free smokes?
Gary 12:50PM (10/13/2008)
Maybe if government regulations required removing nicotine and tar from cigarettes, rather than leaving them with the same poisonous formula they've always been using.
The Luigiian 2:48PM (10/13/2008)
Gary, lemme just say I like your idea.
They should have them remove the nicotine and tar from cigarettes. But the problem then is that people wouldn't get addicted, wouldn't want to smoke, and would...
Wait. Isn't that a positive thing? But then the tobacco farmers would cease to have a cash crop. Well, then we can pay the tobacco farmers not to farm tobacco.
We'll figure it out. We'll spend billions to do it, but dammit, we're America, and that means we can do anything if we put our minds to it!
GTrav 10:45AM (10/13/2008)
"Before the haters arrive, companies in all industries of our economy have always seeked government backed loans to stay afoat and develope new technologies"
Really? To stay afloat? sounds like a poor investment. Does that make me a hater?
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AngeloD 11:07AM (10/13/2008)
""Really? To stay afloat? sounds like a poor investment. Does that make me a hater?""
Poor investment?
For every job lost at GM and additional 10 are lost in directly associated industries.
Providing GM with a low interest loan, identical to that which VW, Toyota, Honda, Hyundai, etc. regularly receive from their governments, would be far cheaper for the taxpayer in the long run.
And I doubt that the Japanese, Germans, Koreans, Chinese, are going to invest inthe US to the extent that the jobs lost from GM going under will ever be replaced.
BrianFL 11:08AM (10/13/2008)
The government help the airline industry after 9/11. Is that a bad investment. We need that industry and those jobs. Would you have rather let them fail and let are airlines be taken over by foriegn companies?
Tim 11:32AM (10/13/2008)
Would you have rather let them fail and let are airlines be taken over by foreign companies?
No. The government should have take them over rather than let CEOs get paid millions to run companies into the ground. The airlines will go bankrupt again soon and will need another bailout.
Brain what should be done is a government takeover where the top management (those who drove the company into the ground) are fired, labor contracts renegotiated then after years of restructuring, turned over back to the private sector in a Stock IPO. If GM uses more taxpayer money the taxpayer should be treated like an investor not a charity. Oh yeah Brian set your browser to spell check what you write.
Gary 1:01PM (10/13/2008)
I don't think that the government should acutally RUN the car companies. Government isn't "tuned" for a competive environment.
The auto and airline industry are different animals. Governments handing out money to airline industries is a necessary evil because the customer demands such low prices. Competition between airlines and their drive for more customers has caused them to slit their own throats by setting prices that can't possibly be profitable. Now customers expect cheap flights--otherwise they won't fly. It would be like the equivalent of all auto makers offering a new mid-size car fo $10,000.
Tim 2:19PM (10/13/2008)
You are misconstruing what I am advocating for. I only want the government to be treated as an investor if we loan them billions of dollars. That is we should have a say on executive pay and stock distributions. Is it fair that we give the company a low interest loan and then they negotiate salaries and management without voter approval or oversight? I say no. Is it fair that we give them loans then GM pays millions in dividends to shareholders. I say no again.
Your airline analogy is also a good example of a broken business model that will be need of an "overhaul" before we throw billions at them.
LS3power 1:04PM (10/13/2008)
We gave the big three, 25 billion dollars in loans. Now GM wants another 5 billion dollars. How are they going to make good on these loans? Will I, as a tax payer see any ROIs?
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Ayatollah Rodriguez 1:25PM (10/13/2008)
Look buddy, these GM martyrs (Wagoner, Bo, Lutz) are doing it for America. We as taxpayers have to bailout GM because we as Americans did not buy their wonderful product, we wanted big SUVs and we turned our back on GM, we have to foot the bill now.
Sarcasm.
tom s 2:19PM (10/13/2008)
I for one would rather see the government bail out American car companies than rich asshole Wall St. investment bankers...atleast GM provides consumers with a product that can be touched, feeled and seen...where as investment bankers convince you to give your hard earned money to them..with a chance (no guarantees) to possibly gain a return on your money...Meanwhile they control and use your money to reinvest for themselves (sure you may make small percentage of return on your investment but it is nothing compared to what the investmant banks make, not to mention look at the penalties,fees taxes you have to pay to liquidate your money) to finanace their lavish lifestyles... i.e. Ponzi schemes...Why should the government bailout these investment bankers who totally made incompentant and immoral decisions...when American car companies are just trying to sell what the think the american consumer wants to buy at the most affordable price...you may disagree with GM styling and cars...that's fine... but don't dis GM just because they are an American company in a little financial trouble looking for some help...
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Frank 2:33PM (10/13/2008)
Screw GM. They can't make good economical cars like ford. Look at Focus, Fusion, even the f'ken Flex get's good mileage. GM has nothing but junk in their line up. It's a pathetic approach. If it were up to me, i'd f'ken stop working to stop paying taxes and start my own business selling herbs that I grow and trust me it will sell under the table. I hate that my taxes have to go these slums of GM. At least FORD is making good products. I HATE GM..... GARBAGE MADE!!!!!!!
And if you have something to say, SAVE IT. I DON'T CARE!!!!!!!!!!!!!!!
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anoldbikeguy 2:56PM (10/13/2008)
@ Frank -
Did someone piss in your oatmeal this morning, or is this your normal useless drivel?
Frank 5:43PM (10/13/2008)
Actually, I had coffee and bagel from Starbucks. Yes, someone did piss me off. That would be General Motors!!!!
B. Gates 2:47PM (10/13/2008)
They should go to ultra wealthy EXXON for a loan because of the (synergy) between the companies.
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tom s 3:54PM (10/13/2008)
it Exxon did that would just perpetuate the notion that american car companies and oil companies are incahoots...