Fed bailout overseer faults order to close car dealerships

WASHINGTON — The Treasury Department failed to consider the economic fallout when it told General Motors and Chrysler to quickly shutter many dealerships as part of government-led bankruptcies, a federal watchdog found.

A report released Sunday by the special inspector general for the government's bailout program raised questions about whether the Obama administration's auto task force considered the job losses from the closings while pressuring the companies to reduce costs.

Treasury didn't show why the cuts were "either necessary for the sake of the companies' economic survival or prudent for the sake of the nation's economic recovery," said the audit by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, the $787 billion stimulus program known as TARP.

"Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses," investigators said.

Those decisions resulted in "potentially adding tens of thousands of workers to the already lengthy unemployment rolls — all based on a theory and without sufficient consideration of the decisions' broader economic impact," the report said.

U.S. likely to lose most of $23 billion bailout of GM and Chrysler

"Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday.

The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

"I think they drove a very hard bargain," said Elizabeth Warren, the panel's chairwoman and a law professor at Harvard University, referring to the Obama administration's Treasury Department. "But it may not be enough."

The prospect of recovering the government's assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10 percent of Chrysler and 61 percent of GM. The two companies are currently private but are expected to issue stock, in GM's case by next year."

Americans prefer unbailed-out Ford over GM and C

"Forty-six percent (46%) of Americans say they’re more likely to buy a Ford because it did not take a federal bailout. Two-thirds of Americans (66%) have a favorable opinion of Ford. Ratings for GM and Chrysler are much lower."

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

Ford's refusal of bailout may become marketing hit

Ford Motor Co's. rejection of government handouts may turn out to be a shrewd marketing decision.

Already, Michiganders are telling talk radio hosts they will buy Ford next time round, rejecting bailed-out Government Motors and Chrysler. In effect, they say they will cast proxy votes against President Obama instead of waiting until 2012 to oppose him through the ballot box.

Millions of Americans might line up to apply for Ford advertising jobs, where the potential for snappy slogans appears limitless:

Buy Nobama. Restore America. Liberty, not fascism. Why would you think a GM car would actually run? Buy one that takes us to freedom, not fascism. Serve yourself, not the government. Drive yourself to liberty, not to servitude. Sock it to the government. Government-made cars have no brakes. GM and Chrysler: it's all about the hood ornament. If you buy GM or Chrysler, check first to see if anyone will insure it.

This won't ensure the survival of American capitalism and free markets but it'll give us another chance to vote against Obama.

How the White House stomped on contracts to secure Chrysler overhaul deal

Here is the explosive interview in which Thomas Lauria, attorney for a hedge fund being steamrolled by the Obama administration, details how the White House scrapped private contracts to force compliance with the overhaul of Chrysler Corp. If the White House will go this far, Lauria asks, "what right will it not attack." Good question.

http://www.wjr.net/Article.asp?id=1301727&spid=6525

Obama pursues "banana republic capitalism"

"The Chrysler reorganization is shaping up as another milestone in the decline of the rule of law under Barack Obama. We've said for quite a while that bankruptcy is the only viable option for Chrysler and General Motors, not--as Obama claims--because they don't know how to make the right kinds of vehicles, but because their unsustainable union contracts make it impossible for them to be profitable. That reality has now been turned on its head, as the administration has tried to bully Chrysler's secured creditors into going away, while the United Auto Workers Union, solely on the basis of political clout, would be paid at an implied rate of 50 percent and would emerge owning 55 percent of the company, with the government also holding a stake.

This is banana republic capitalism at its worst. Political influence, rather than the law, dictates the rights of the parties. When some of the secured creditors refused to be intimidated, Obama libeled them in the press, saying, outrageously, "I don't stand with those who held out when everyone else is making sacrifices." Actually, under Obama's plan the politically favored parties, principally the UAW, will benefit--will steal money, to put it crudely--from the parties who held out. Those parties call themselves the 'non-TARP lenders.'"

http://www.powerlineblog.com/archives/2009/04/023460.php