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Ford took a loan. Ford got an interest rate that a normal citizen couldn't get, clearly there was special treatment. But it's not like we handed them 9 billion
by jfoutz 10y ago
Ford took a loan. Ford got an interest rate that a normal citizen couldn't get, clearly there was special treatment. But it's not like we handed them 9 billion dollars. It seemed like banks were freaking out in 2009, and really wouldn't give a loan at any interest rate. Assuming a sane banking structure, where it was possible to get a loan, 1% on 5.6 billion is around 50 million a year.
"bailout" is a fairly fuzzy term. If the banking system was working, there would have been no need for DOE loans. There was also the benefit of improved milage, thereby reducing carbon emissions. This seems like the sort of thing the DOE does anyway, and wouldn't raise eyebrows in a sane banking environment. I think by your meaning of "bailout" student loans are also a bailout.
On the other hand, GM and Chrysler went bankrupt. They sold secured assets to new GM and new Chrysler and, i believe, gave investors quite a haircut.
- busterarm 10y agoSo with the bailouts, they took the haircut right away and baked the risk into the deal they made with the auto manufacturers. Then they ate the risk in their transaction right away and wrote down the loss. With the loans they made to Ford they used a different tactic -- they said to hell with the financial risk (which you usually bake into your interest rate) and made the loans anyway and left open the possibility of devastating financial losses. The only reason we're looking at this positively is because Ford was a success story. Had Ford folded, congressional heads would have rolled and we'd be cursing the TALF loans and praising the TARP bailouts.
- brohoolio 10y agoJust to clarify that the whole banking system was locked up and there was no capital. In a normal market GM and Chrysler could have done what Ford did. Ford was in better shape than the others because they had mortgaged everything before the financial system locked up. That means they also started improving everything sooner. From my perspective in Michigan the auto bailout was a huge success. My friends in the industry report that most of the cruft in the big three was cut or let go and they really shifted the culture. The whole industry is focused on technology. The suppliers survived. Hundreds of thousands of jobs exist because of the injection of liquidity.
- busterarm 10y agoI similarly think that the bailout was a success. I just think that people have a horribly myopic perspective when they act like Ford didn't receive government/taxpayer benefits during the financial crisis.
- jfoutz 10y agoFisker and VPG were clearly failures, Tesla and Nissan seemed to work out ok though. You're clearly much more well versed in this situation than i am. It looks to me like a subsidize what you want and tax what you don't style economic policy, just like corn in Iowa. or FHA loans. But i think we agree (since you changed your terms) it's not exactly a "bailout", but the timing sure was super handy for ford.
- busterarm 10y agoOh man...Fisker. Not that they were doing well anyway, but Hurricane Sandy sure did kill off that company.
- SilasX 10y agoI think you're confusing the energy efficiency loans with the TALF money. TALF was the Treasury, intended to prop up the industry, and is arguably a bailout; the energy efficiency loan was the DoE thing and was predicated on development of certain models of electric/fuel efficient cars.