Ford Took Federal Funds, To

[AuPanda]

Well this article is more than a little disappointing:



While Ford was making noise about not taking federal bailout money, they and other major automakers (both foreign and domestic) got federal aid to the tune of tens of billions of dollars when the economy tanked in 2008.

Yesterday, the federal government released the names of companies and the amounts of loans handed out during the financial crisis of 2008 to keep loans flowing as credit dried up everywhere. A number of those companies were the lending arms of automakers.

Automotive blog Jalopnik broke down which automotive lending companies got the most help, and leading the way was Ford Credit, which borrowed $15.9 billion. GMAC, GM’s financing arm which provided auto loans beyond the GM family of vehicles, took $13.9 billion. BMW took $6.2 billion. Chrysler $4.9 billion and Toyota $4.6 billion.

The GM and Chrysler loans were completely separate from those two companies’ government-financed bankruptcies.

While the news and numbers aren’t earth shattering — funds to the automotive lending companies totaled just $57.9 billion out of $3.3 trillion in TARP funds — it could color Ford’s perception as the only Detroit-based company that didn’t need a federal handout during the economic crash.

That’s a perception the company has fueled itself, by making statements about how not taking a “bailout” has been beneficial to its recent resurgence. We realize the two transactions are quite different, and this loan was not a bailout.

But we wonder how the public will see it.

All of this aid has since been repaid with interest to the government.

Graph courtesy of Jalopnik

http://blogs.cars.com/kickingtires/2010/12/report-ford-took-federal-funds-too.html

 

[frogslinger]

Ford also took part in a massive bailout a couple decades ago...

If you watch the special that has been airing you also will notice that the main reason that Ford did not tank was
1) a good business plan but (and more importantly)
2) they borrowed a TON of money right before the economy went to hell... the other two were a couple months late with their requests and the financial market had gone to hell and so the banks said no...

 

[MagicMtnDan]

Blah blah blah blah blah.

Sounds to me like they were LOANS to their financial arms (GM's too).

And it sounds like they didn't take any bailout money.

 

[Hockster]

eh... big deal who cares...

 

[frogslinger]

The bailout was ALL loans...

Ford Credit took bailout funds...

 

[MagicMtnDan]

The bailout was ALL loans...

Ford Credit took bailout funds...

That's not what the article posted by the OP says, "We realize the two transactions are quite different, and this loan was not a bailout."

 

[tigercrazy718]

yea i read somewhere were they broke it all down and apparently theyre 2 completely different things
i dont know anything about finance so i cant explain it tho lol

 

[frogslinger]

Ok... the "bailout" was funds given directly to the auto industry because they were broke in exchange for which the company gave the federal govt ownership control because they had assets that could be liquidated and were worth something...

these "loans" were funds given directly to the auto industry because they were broke in exchange for which the company gave the federal govt a promise to pay, because they had no assets that could be liquidated...

The funds all came from TARP/Bailout funds...

So to summerise, they are all bailout loans. To say they are quite different is to say that your risk of cancer from smoking marlboros is significantly different from you risk of cancer from smoking camels... it isn't.

GM has paid back their loans and a great deal of the ownership via "private" financing as well as its IPO. IIRC Ford's loans are still outstanding. That is not to say GM has done better than Ford, just that they have accountants who move money around smartly, and ad men who see the advantage of creating the illusion with customers that Gm has paid of its debts... much like Ford's ad men were great at creating the illusion that Ford did not take the same federal funds that the others took...

looks like it worked, huh?

 

[MarkT]

First off, this article is about automotive LENDING companies and the money they borrowed. (Not the manufacturers) Lending companies borrow money. Where do you think banks get the money to make loans with??? They borrow it from the government at the low interest rates and then give it to you at a higher interest rate. The difference between the two rates is the bank's profit.

There is a HUGE difference between the money borrowed by the lending divisions (and all of it repaid with interest as the OP says) and the government financed bankruptcies of the MANUFACTURERS Chrysler and GM. The article clearly says this money loaned to the lending divisions was not a bailout and that this money is completely seperate from the bailouts that GM and Chrysler took.

Ford isn't better at putting a "spin" on things with their ad men. In this case, they did not take a bailout. GM and Chrysler did. Plain and simple.

Want to talk about putting a spin on things? Remember those ads on TV where GM claimed they repaid their "bailout"? Technically, they did. What happened was they took even MORE money and as a condition were forced to use part of it to repay the original bailout. Kind of like the difference between taking out a second loan on your house and refinancing the entire debt.

A second mortgage is an additional loan that obviously increases your debt. A refinance pays off the original loan so you could tell everyone "you paid off your house"... but in reality, you now even owe MORE money.

GM's "ad men" are the ones who are trying to putting a spin on things IMHO.

 

[bstoner59]

First off, this article is about automotive LENDING companies and the money they borrowed. (Not the manufacturers) Lending companies borrow money. Where do you think banks get the money to make loans with??? They borrow it from the government at the low interest rates and then give it to you at a higher interest rate. The difference between the two rates is the bank's profit.

There is a HUGE difference between the money borrowed by the lending divisions (and all of it repaid with interest as the OP says) and the government financed bankruptcies of the MANUFACTURERS Chrysler and GM. The article clearly says this money loaned to the lending divisions was not a bailout and that this money is completely seperate from the bailouts that GM and Chrysler took.

Ford isn't better at putting a "spin" on things with their ad men. In this case, they did not take a bailout. GM and Chrysler did. Plain and simple.

Want to talk about putting a spin on things? Remember those ads on TV where GM claimed they repaid their "bailout"? Technically, they did. What happened was they took even MORE money and as a condition were forced to use part of it to repay the original bailout. Kind of like the difference between taking out a second loan on your house and refinancing the entire debt.

A second mortgage is an additional loan that obviously increases your debt. A refinance pays off the original loan so you could tell everyone "you paid off your house"... but in reality, you now even owe MORE money.

GM's "ad men" are the ones who are trying to putting a spin on things IMHO.

I agree...it's more like the money that was given to banks to ensure their ability to lend money during the collapse. Funny the only "banks" that used the Federal money to continue lending were the car companies' lending arms. All the other banks kept the money to cover the bad dept they had on the books.