Autoblog

Treasury to begin selling off more GM stock

Jonathon Ramsey — Thu, 09 May 2013 09:29:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Reuters reports that earlier this week the US Treasury announced the sale of another tranche of General Motors stock. It didn't say how many of the 241.7 million shares it holds in the automaker it would sell, nor exactly when - the discretion apparently intended to keep hedge funds from profiting from the situation. The government's ownership is broken down into common and diluted shares, representing close to 18 percent of the company at the moment, down from the 60.8 percent it owned in 2009 after GM's bankruptcy. This follows a share sale in February, when Treasury sold 17.2 million shares for $489 million.

Although GM's share price is nowhere near the $70-per-share or so that Treasury would need to break even, the department has reiterated that the point of the Troubled Asset Relief Program (TARP) wasn't to make money but to save jobs. GM's share price has, however, almost edged back to its November 2012 IPO price of $33. At the time of writing, shares were trading for $32.10. Based on the timetable Treasury gave in December, it should be fully divested of its GM ownership within a year from now.

Treasury to begin selling off more GM stock originally appeared on Autoblog on Thu, 09 May 2013 09:29:00 EST. Please see our terms for use of feeds.

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US Treasury denies pay hikes for GM, Ally execs

Jonathon Ramsey — Mon, 29 Apr 2013 11:30:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

In December, the US Treasury granted General Motors the rights for the company to once again buy corporate jets and for its executives to fly on them, but neither those execs nor the ones at Ally Financial will get any raises this year. The automaker, worried that top talent might leave for higher-paying pastures, reportedly sought a more "market-based approach to executive compensation" for 12 of its top 25 execs. Because the federal government still has stakes in both GM and Ally, though, the companies need approval for pay raises, and they were declined. Neither company sought raises for their CEOs, and Ally's request didn't involve any additional cash compensation for the executives in question.

While the Treasury says that cash salaries for the 25 top executives at GM and Ally combined are just four percent below the median compared to similar positions, total cash compensation is 56 percent below the median. That would include GM CEO Dan Akerson (shown), who got a little more cash last year because of a compensation rearrangement speculated to potentially involve his retirement, but the overall annual pay package of $9 million hasn't changed for him since 2010 according to the Treasury.

What's more, it's said the overall compensation at both firms dropped by double-digit percentages compared to last year due to an influx of new appointments among the top 25 executives. The Treasury has said it will divest itself of all GM shares it owns by March 2014, but hasn't given a any guidance on divestiture of its Ally stock, the financial firm dealing with a much more complicated situation.

US Treasury denies pay hikes for GM, Ally execs originally appeared on Autoblog on Mon, 29 Apr 2013 11:30:00 EST. Please see our terms for use of feeds.

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Treasury sold off $489M of GM stock in February

Zach Bowman — Tue, 12 Mar 2013 16:31:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

The Detroit News reports that the US Treasury sold off around 17.2 million shares of General Motors stock in February worth $489 million. The move is part of a plan to rid the government of GM stock by March, 2014. All told, the government has regained $29.8 billion of the $49.5 billion it took to bail out GM in 2008 and 2009. The feds sold off nearly half the country's stake in the automaker when the company went public in 2010, and now taxpayers own around 19 percent of the manufacturer. Moving forward, the Treasury will disclose how many shares it has sold each financial quarter.

Earlier this year, the government named Citigroup Inc. and JPMorgan Chase & Co. to manage the sale of GM stock. The duo will receive around $3 million for handling the sale, though the government has opted to keep its trading plan under wraps to keep hedge funds from taking advantage of the situation. The plan does place limits on exactly how much stock can be sold at any given time, however. Six smaller brokerages will handle the sale of the Treasury's GM common stock.

Treasury sold off $489M of GM stock in February originally appeared on Autoblog on Tue, 12 Mar 2013 16:31:00 EST. Please see our terms for use of feeds.

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Treasury says auto bailout tally drops to $20.3 billion

Jonathon Ramsey — Tue, 12 Feb 2013 18:00:00 EST

Filed under: Government/Legal, Chrysler, GM, Earnings/Financials

In December, the US Treasury announced that it was going to sell all of its shares in General Motors within 12 to 15 months. The first tranche of the 500-million total shares was purchased by GM, which took 200 million of them at $27.50 per share. That price represents an eight-percent premium over the market price at the time. The remaining 300 million shares will be sold "through various means in an orderly fashion."

Of the $418 billion disbursed through the Troubled Asset Relief Program (TARP), a report in Automotive News indicates that "about 93 percent" has been paid back, and the latest figures put Treasury's loss from the program overall at $55.58 billion. That's a $4.1 billion improvement on the last figure, when the expected red ink added up to $59.68 billion. The auto industry's portion of that loss is estimated to be $20.3 billion, a 16-percent drop from the earlier estimate of $24.3 billion.

The Treasury now owns 19 percent of GM, but if all goes well, there will be no more cause for anyone to utter "Government Motors" by the end of Q1 next year. A loss of some kind is still expected, however. Although GM's stock price is close to $29 at the time of this writing, that's still $4 below its IPO price and well below the $72 share price necessary for the government to come out even on its GM investment. On second thought, maybe the ribbing will continue.

Treasury says auto bailout tally drops to $20.3 billion originally appeared on Autoblog on Tue, 12 Feb 2013 18:00:00 EST. Please see our terms for use of feeds.

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Former CEO Whitacre urges Treasury to sell stake in General Motors

Seyth Miersma — Thu, 20 Sep 2012 13:45:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Former General Motors chairman and CEO Ed Whitacre is in the papers today, specifically the Opinion section of The Wall Street Journal, espousing a strong belief that the U.S. Treasury should get out of GM's hair as quickly as possible. Whitacre's sentiments come, no doubt, as a response to the recent news that GM has been pressuring the Treasury to sell off its remaining 500 million shares of the company's stock.

In the op-ed piece, Whitacre is careful to express just how important the U.S. Government's bailout - an initiative known as the Troubled Asset Relief Program, or TARP - was when $50 billion was added to the company coffers in 2009. But he goes on to say that government involvement has long since run its useful course, and its presence is now serving to hold back the automaker, rather than serve to secure the U.S. public's investment.

Writes Whitacre, pointedly, about the continued involvement of TARP regulators at GM, "The company already answers to a lot of constituencies: stockholders, unions, Wall Street and global competitors. Adding TARP to the mix for another few years, or even another few quarters, is not fair to GM or to the one million people it employs, directly and indirectly."

Whichever side of this debate you happen to fall on, it's well worth taking the time to read Whitacre's words in full, over at the WSJ's site.

Former CEO Whitacre urges Treasury to sell stake in General Motors originally appeared on Autoblog on Thu, 20 Sep 2012 13:45:00 EST. Please see our terms for use of feeds.

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WSJ: Feds turned down GM request to sell its remaining shares [w/video]

Seyth Miersma — Mon, 17 Sep 2012 14:30:00 EST

Filed under: Government/Legal, GM

The Wall Street Journal released a report today, which indicated that the U.S. Treasury Department is unwilling to sell off its stake in General Motors, because to do so now would lead to a very large loss on the investment for the government.

GM proposed the buyback plan to the Treasury Department, earlier this year.

The Treasury currently holds a 26.5-percent stake in GM, or roughly 500 million shares. WSJ reported Friday that the government would stand to lose about $15 billion if it sold all of its GM stock for the roughly $24 the shares now command. Further, the share price would need to $53 before the Treasury would be able to break even on its investment in the automaker.

The newspaper did report that the Treasury might be willing to sell off its GM assets if the share price was in the $30-range.

Check out some more commentary about the situation from WSJ, in the video below.

Continue reading WSJ: Feds turned down GM request to sell its remaining shares [w/video]

WSJ: Feds turned down GM request to sell its remaining shares [w/video] originally appeared on Autoblog on Mon, 17 Sep 2012 14:30:00 EST. Please see our terms for use of feeds.

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Horsepower Politics

Paul Eisenstein — Thu, 13 Sep 2012 16:57:00 EST

Filed under: Government/Legal, Earnings/Financials

The Role Autos Are Playing In Deciding Our Next President

He was elected to the U.S. Senate in 1942 and served a dozen years during which his most memorable act was introducing the bill that added the words, "under God" into the Pledge of Allegiance. But to both his friends and foes alike, Homer S. Ferguson had a more important agenda that earned him the sobriquet "the Senator from General Motors."

As the recent Supreme Court decision commonly referred to as "Citizens United" only underscored, money has always played a part in politics. And for much of the 20th Century, few had the sort of money to invest in influencing government like the auto industry, especially giant GM.

But something curious has happened in the world of horsepower politics over the last few years. General Motors, in particular, has become as much a topic of debate as the force influencing the discussion. And where you stand on the subject could very well influence how you vote in this November's presidential election.

Paul A. Eisenstein is Publisher of TheDetroitBureau.com and a 30-year veteran of the automotive beat. His editorials bring his unique perspective and deep understanding of the auto world to Autoblog readers on a regular basis.

Continue reading Horsepower Politics

Horsepower Politics originally appeared on Autoblog on Thu, 13 Sep 2012 16:57:00 EST. Please see our terms for use of feeds.

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Watchdog says White House needs exit strategy for GM, Ally

Jonathon Ramsey — Thu, 12 Jul 2012 11:30:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Christy Romero, a special inspector general examining the corporate bailouts that came in the wake of 2008's financial crisis, has some advice for the U.S. government: "Treasury should develop a concrete exit plan for GM and Ally." She is referring, of course, to the 30-percent stake that the government still holds in General Motors and the 74-percent stake it holds in Ally Financial, formerly known as GMAC when the Treasury pumped $17 billion into it.

For its part, the government says it already has an exit plan and Romero doesn't offer any further advice to guide that plan in some other direction. With the calls for Treasury to divest coming even more frequently during the U.S. Presidential race, Treasury has repeatedly stated the same thing: it is waiting for the right time to maximize its return, thereby minimizing the loss to the U.S. taxpayer.

With 500 million GM shares in its portfolio, the government needs those shares at $52-per in order to recoup the remainder of its initial $50 billion investment. Shares are right around $20, which would mean a highly unpalatable Greek haircut if the government gave up its position. Recent GM moves have also led the Treasury to believe that there is unlocked value in the company that the market simply hasn't reacted to yet; however, that sentiment was voiced two months ago and the stock price still hasn't budged.

Ally Financial is a different conundrum, one that the Treasury seems to be much more eager to divest itself of. The financial firm has paid back $5.4 billion of its TARP loan and filed IPO paperwork a year ago, but there's still not even a potential date for an offering, and no one seems to have any idea when it will pay off the rest of the funds. While plans are debated for an offering or a breakup of the company, Treasury has suggested that GM buy back Ally, but GM hasn't indicated any desire to do so.

So in effect, nothing has really changed, but at least now we have more figures in the government suggesting that the government get out of GM.

Watchdog says White House needs exit strategy for GM, Ally originally appeared on Autoblog on Thu, 12 Jul 2012 11:30:00 EST. Please see our terms for use of feeds.

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Romney vows to dump federal stake in GM quickly

Jonathon Ramsey — Tue, 05 Jun 2012 11:32:00 EST

Filed under: Government/Legal

With a multi-volume list of issues that a presidential hopeful could discuss, we aren't sure why Mitt Romney keeps circling back to the auto industry bailouts, but here we are again. He's lately swinging his stick at the U.S. Treasury Department for not having sold its 26.5-percent stake in General Motors, accusing it of holding back on the stock sale to avoid having to report a multi-billion dollar loss before the election.

At GM's current stock price, the government would lose about $16 billion by sellings its 500 million shares, a number that hasn't much changed from several months ago. Romney said the government has "no reason" for not selling, and a report of his interview with The Detroit News says that "he'd sell the stock quickly if he wins the White House." A Treasury spokesman responded with "We have to balance maximizing recovery for the taxpayers with the speed of exit."

On top of that, Romney said that if he becomes POTUS, he would take another look at Corporate Average Fuel Economy standards, believing that "The best approach is to try and build vehicles that people want, rather than having the government telling the companies what they must make." It's a line we've heard (and even uttered) often, but the nexus of government regulations, consumer desires, viable business models and long-term industry concerns is a moving target shifty enough to confuse quantum physicists.

Either way, it's clearly fair to expect more jabs from Romney at President Obama and the auto bailout as the campaign season grinds toward election day.

Romney vows to dump federal stake in GM quickly originally appeared on Autoblog on Tue, 05 Jun 2012 11:32:00 EST. Please see our terms for use of feeds.

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Treasury suggests GM buy back troubled Ally Financial

Jonathon Ramsey — Wed, 28 Mar 2012 10:30:00 EST

Filed under: Government/Legal, Earnings/Financials

Back when Ally Financial was known as GMAC Financial, the U.S. Treasury gave it $17.2 billion in TARP funds to weather the global economic crisis. GMAC is now Ally Financial, and although it has repaid $5.4 billion of what it was loaned, there doesn't seem to be a clear path for repaying the outstanding amount. Bloomberg reports that Ally's mortgage unit, Residential Captial (ResCap), is teetering on the ledge of bankrupcty, and its banking operations didn't perform well in the Federal Reserve's stress tests that assess a bank's health.

An IPO for the entire company faces dim prospects (one was rumored back in April of 2011), so in a private equity ploy, the Treasury would like Ally to divvy itself up and sell the pieces to unlock value. Estimates are that the pieces could fetch $23.1 to $28.6 billion. The plan is supported by Elliott Management Corp, a shareholder that holds 2.3 percent of Ally stock. However, Ally's CEO and its board don't want to break the company up, and the Treasury - which holds 74 percent - doesn't want to lean on the leadership too hard for fear of "appearing as a heavy-handed owner."

In addition, the looming bankruptcy of ResCap will have an unknown effect on Ally's ability to do anything. Before the mortgage implosion, GMAC's auto unit was struggling and ResCap was restructured as a separate entity so that it wouldn't be dragged down by the captive finance department. The situation is reversed now, with ResCap in trouble and the captive finance arm supporting itself, but Elliot feels that the restructuring won't be enough to shield Ally from perhaps 18 months of litigation and billions in claims.

Ally execs feel differently, but no one will know until the trigger is pulled and the courts weigh in. With the Treasury reluctant to compel a move, it could be some time before it sees its $11.8 billion again.

Treasury suggests GM buy back troubled Ally Financial originally appeared on Autoblog on Wed, 28 Mar 2012 10:30:00 EST. Please see our terms for use of feeds.

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Bush says he'd pull the trigger on auto bailouts again

Zach Bowman — Tue, 07 Feb 2012 10:29:00 EST

Filed under: Government/Legal, Chrysler, GM

President George W. Bush recently spoke to a gathering of auto dealers in Las Vegas, saying that while he believes in the free market under normal conditions, he doesn't regret the $700 billion bailout fund used to rescue General Motors and Chrysler from the brink of collapse. Bush was quoted as saying he'd do it again, and that he didn't want there to be a 21 percent unemployment rate. The former leader avoided addressing remarks from the current gaggle of Republican presidential candidates who have criticized his decision to lend a hand to banks, insurers and automakers.

"If you make a bad decision, you ought to pay," Bush said. "Sometimes circumstances get in the way of philosophy."

Bush championed a $17.4 billion bailout for the two automakers in December of 2008 as part of the $700 billion Troubled Asset Relief Program. Republican presidential candidate Mitt Romney has said both Bush and current President Barack Obama were mistaken in bailing out the auto industry. Instead, Romney believes GM and Chrysler should have been allowed to go into a controlled bankruptcy from the start.

Bush says he'd pull the trigger on auto bailouts again originally appeared on Autoblog on Tue, 07 Feb 2012 10:29:00 EST. Please see our terms for use of feeds.

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Report: Fund oversight panel says jury still out on auto bailouts

Aaron Richardson — Thu, 17 Mar 2011 10:40:00 EST

Filed under: Government/Legal, Chrysler, Ford, GM, Earnings/Financials

The Congressional Oversight Panel charged with overseeing America's $700 billion federal bailout fund admits that it still isn't sure if the measure will save the auto industry in the long run, The Detroit News is reporting. As you'll recall, the $700 billion was divvied up between banks, insurers and General Motors and Chrysler, among others.

According to the panel, the Treasury had no specific goals for the $85 billion it gave automakers, so it will be hard to gauge the success of the loan in the long term. For now, it would seem that the bailout worked, with GM and Chrysler both posting their first profits in years in 2010.

Last year, GM cleared a $6.2 billion profit - its first year in the black since 2004. Chrysler also managed a profit, and Ford, who didn't take any money from the government, ratcheted a $6.6 billion profit.

As part of its final 236-page report, the oversight panel also reduced its estimate of how much money the bailout would cost taxpayers, from $40 billion to $17 billion.

[Source: The Detroit News | Image: Mark Wilson/Getty]

Report: Fund oversight panel says jury still out on auto bailouts originally appeared on Autoblog on Thu, 17 Mar 2011 10:40:00 EST. Please see our terms for use of feeds.

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Report: General Motors eligible for a tax break of up to $45B

Jeff Glucker — Fri, 05 Nov 2010 17:45:00 EST

Filed under: GM, Earnings/Financials

They say that only certain things in life are death and taxes. General Motors already escaped one of the two, and now it's getting a big break on the other - as part of GM's restructuring plan, it's eligible for up to $45 billion in tax breaks. Under the Troubled Asset Relief Program (TARP), General Motors can utilizes its pre-bankruptcy losses to offset future tax liabilities. This should provide a large dose of financial help for the automaker, as it goes forward with its IPO and works to pay back the US and Canadian tax-paying public.

[Source: Automotive News - sub. req. | Image: Paul Sancya/AP Photo]

Report: General Motors eligible for a tax break of up to $45B originally appeared on Autoblog on Fri, 05 Nov 2010 17:45:00 EST. Please see our terms for use of feeds.

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Pay czar Kenneth Feinberg stepping down this summer

Jonathon Ramsey — Fri, 25 Jun 2010 17:27:00 EST

Filed under: Government/Legal, Earnings/Financials

Kenneth Feinberg, the man who earned the nickname Pay Czar and then took a hammer and sickle to the wages of General Motors, Chrysler, Ally Financial and AIG execs, will be departing his post this summer. The new government job he's set to transfer to will keep him in the oversight business: head of the $20 billion fund created by British Petroleum to pay for the damage caused by the Deepwater Horizon oil spill. Although Feinberg will "monitor" four TARP firms when he leaves, he'll be more focused on preparing his office for for an as-yet-unnamed replacement.

[Source: Detroit News | Image: Win McNamee/Getty]

Pay czar Kenneth Feinberg stepping down this summer originally appeared on Autoblog on Fri, 25 Jun 2010 17:27:00 EST. Please see our terms for use of feeds.

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Treasury reportedly says GM properly used escrow to repay loans

Zach Bowman — Thu, 29 Apr 2010 10:00:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

General Motors didn't use another government loan to pay off the much-celebrated $4.7 billion portion of its federal debt. According to a spokesperson with the Treasury Department cited by Bloomberg, the Detroit-based carmaker properly used funds from an escrow account to do the deed. The funds were available for the automaker to use in the event that it ran across any extraordinary expenses, but since the manufacturer decided it didn't need the money, it paid it back.

Despite the fanfare surrounding GM's repayment of a portion of its federal loans, some critics accused the company of using other government money for the payoff. Specifically, Senator Charles Grassley, the top Republican on the Senate Finance Committee, accused the automaker of performing a "TARP money shuffle" as a public relations stunt. Treasury Assistant Secretary for Financial Stability Herbert M. Allison disputed Grassley's claim in a letter on Tuesday.

[Source: Bloomberg]

Treasury reportedly says GM properly used escrow to repay loans originally appeared on Autoblog on Thu, 29 Apr 2010 10:00:00 EST. Please see our terms for use of feeds.

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Report: Congressional panel doubts GMAC business case, suggests breakup

Jeremy Korzeniewski — Fri, 12 Mar 2010 13:58:00 EST

Filed under: Government/Legal, Earnings/Financials

"The panel is deeply concerned that Treasury has not required GMAC to lay out a clear path to viability or a strategy for fully repaying taxpayers." This, according to a Congressional Oversight Panel that was created as a watchdog for the U.S. Treasury's Troubled Asset Relief Program (TARP) funds. The fix? Potentially breaking GMAC up into units and merging its auto lending business back into General Motors.

As a refresher, the Treasury invested $17.2 billion in TARP funds into GMAC, after which the financial company lost $8.3 billion on its Residential Capital unit in 2009. For it's part, Treasury has responded to the panel in a statement, saying, "Treasury continues to be a reluctant shareholder and to manage its investment in GMAC in a hands-off commercial manner consistent with the administration's established principles that guide Treasury's management of financial interests in private firms."

And since we've heard from the congressional panel and Treasury, why not from GMAC itself? Again, from a statement as reported to Automotive News: "We appreciate the panel's responsibility to analyze history; however, GMAC's management team is focused on the future. That includes continuing to provide the highest level of service to auto dealers and consumers in support of our auto partners, returning GMAC to a high level of profitability, and repaying the U.S. Treasury."

At this point, there's no clear indication on how Treasury or the congressional panel will proceed. Regardless, this is an issue that we'll be keeping a close eye on in the coming weeks. Stay tuned.

[Source: Automotive News - sub. req'd. | Image: Craig Jones/Getty]

Report: Congressional panel doubts GMAC business case, suggests breakup originally appeared on Autoblog on Fri, 12 Mar 2010 13:58:00 EST. Please see our terms for use of feeds.

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GMAC to post $10B loss after U.S. govt takes the wheel?

Jonathon Ramsey — Fri, 08 Jan 2010 18:01:00 EST

Filed under: Earnings/Financials

No one likes to bandy on with clichés, but in some cases avoiding a cliché is to ignore a long history of facts and experience that brought it into existence. The cliché we speak is the one about hurling good money after bad. After the government hosed down GMAC with another $3 billion, Uncle Sam's stake in GM and Chrysler's official lender is anywhere from 56 percent to 70 percent depending on the kind of shares the government holds.

The money IV, though, hasn't come close to stemming the losses at GMAC - specifically its Residential Capital unit that was a subprime lending fiend not so long ago. The parent company looks to report a $10B loss for 2009 - its largest yearly loss ever - due to a fourth quarter loss of $5B, which also sets a company record for one quarter.

As to the wisdom of combining good money and bad, the government doesn't have a lot of choice: other bailed-out banks' lending practices would make Scrooge say, "Wow, that's stingy," and if GMAC goes under then a lot of GM and Chrysler dealers take fatal hits. Nevertheless, don't expect this year to bring better results: delinquencies will peak next year while home prices bottom out, and the government's subsidies for mortgage-holders will probably end this year. All of that probably equals a prognosis that could come from the Book of Cataclysm: "Let there be pain."

[Source: Business Week | Image: Craig Jones/Getty]

GMAC to post $10B loss after U.S. govt takes the wheel? originally appeared on Autoblog on Fri, 08 Jan 2010 18:01:00 EST. Please see our terms for use of feeds.

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Reports: GMAC close to getting $3B+ cash injection from U.S. government

Chris Shunk — Wed, 30 Dec 2009 13:31:00 EST

Filed under: Government/Legal

When the U.S. government conducted bank stress tests earlier in the year, one of the financial institutes that didn't pass the mid-term exam was GMAC. At the time, the government told GMAC that it would need another $5.6 billion to weather another economic calamity, but the Detroit Free Press reports that the final number will be actually be $3 billion (The Wall Street Journal is reporting $3.5 billion). The money will reportedly come courtesy the $700 billion TARP fund that kept Chrysler, General Motors and many banks afloat during the worst days of the recession. GMAC has already received $12.5 billion from the federal government.

GMAC, which is now 35-percent owned by the federal government, now controls financing for both GM and Chrysler. GMAC spokesperson Gina Proia declined to discuss any cash infusion due to the fact that the government hasn't officially announced anything, but she did add that the financing company "has been conducting a strategic review of its business and evaluating options to address the challenges in its mortgage operation." An official announcement is expected later today or sometime Thursday.

[Sources: Detroit Free Press; The Wall Street Journal]

Reports: GMAC close to getting $3B+ cash injection from U.S. government originally appeared on Autoblog on Wed, 30 Dec 2009 13:31:00 EST. Please see our terms for use of feeds.

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Former President Bush asks Obama to exit the car business

Jonathon Ramsey — Mon, 26 Oct 2009 12:58:00 EST

Filed under: Government/Legal

When Former President George W. Bush spoke to the Montreal Board of Trade recently, he made a public appeal to the Obama administration to "get out of the private sector," adding "I hope our government gets out of the autos and the financials in which they have a stake." His premise is that it takes private companies to turn an economy around, not government-run ones.

As we have found out during America's recent economic troubles, a lot of people find it easy to say a lot of things when they're not on the hook. And the former Commander-in-Chief isn't the first (nor the only) ex-President to offer such advice; they've all done it - he's only the most recent. But this is coming from the man whose VP sold him out as giving TARP money to prevent General Motors and Chrysler bankruptcies on his watch. Lest we forget, Bush is also the man who said:

"Well, I have obviously made a decision to make sure the economy doesn't collapse. I've abandoned free market principles to save the free market system. I think when people review what's taken place in the last six months, uh, and put it all in one, in one, (sigh), you know, in one package, they're realize how significantly we have moved."

Forget about politics, it isn't even that what Bush has said is wrong, per se - by most accounts, the American government shouldn't be in the car business nor the retail banking business, and the current administration agrees with that, having said repeatedly it wants to get out of both. But they inherited the issue, and now it's up to them to figure out the best way out of it. Hat tip to Avinash!

[Source: Bloomberg | Image: Getty]

Former President Bush asks Obama to exit the car business originally appeared on Autoblog on Mon, 26 Oct 2009 12:58:00 EST. Please see our terms for use of feeds.

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REPORT: Pay czar planning up to 90% compensation cuts for top auto execs

Chris Shunk — Thu, 22 Oct 2009 12:21:00 EST

Filed under: Chrysler, GM

When General Motors and Chrysler took money from the U.S. government to prevent being consigned to history, the two storied domestic automakers had no choice but to put their fates in Uncle Sam's hands. After two very brief bankruptcies and billions in bailout cash, America's favorite bearded relative is looking to take its own pound of flesh.

Automotive News is reporting that the Obama administration and the Treasury Department are planning to announce pay cuts of up to 90% for the top 25 earners at GM, Chrysler, GMAC and Chrysler Financial. U.S. pay czar Kenneth Feinberg reportedly negotiated the pay arrangements with the companies during four months of negotiations.

The reported cuts will put a deep gash into the pay of executives like Fritz Henderson, who reportedly earned $1.3 million last year. There is no word at this time whether the bonuses of top auto execs will also be trimmed. GM and Chrysler aren't the only TARP recipients to get a big-time pay cut either, as top execs from AIG, Bank of America and Citigroup are also going to experience the economic downturn in a very real way. According to AN sources, pay cuts will average around 50% between the seven companies. The AN source claims that AIG execs, for example, will not receive compensation that surpasses $200,000. Companies that have already paid back TARP money, however, will not be affected by the government-mandated pay cuts.

[Source: Automotive News, sub. req'd | Source photo by JUNG YEON-JE/AFP/Getty]

REPORT: Pay czar planning up to 90% compensation cuts for top auto execs originally appeared on Autoblog on Thu, 22 Oct 2009 12:21:00 EST. Please see our terms for use of feeds.

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