Archive for December, 2009

Year in Review

By: admin
Published: December 31st, 2009

Try JibJab Sendables® eCards today!
VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)


By: admin
Published: December 30th, 2009

An introspective look at the future of America – (ht Largo Winch) – As we exit the year, we are told the US is a laissez-faire free market economy and yet the US government is now the largest owner of housing in the US as well as the owner of last resort for some of the largest and completely insolvent US corporations.

No Jobs for Ten Years? – The decade ahead could be a brutal one for America’s unemployed – and for people with jobs hoping for pay raises. At best, it could take until the middle of the decade for the nation to generate enough jobs to drive down the unemployment rate to a normal 5 or 6 percent and keep it there. At worst, that won’t happen until much later – perhaps not until the next decade.

2010 could be a year that sparks unrestIF THE world appears to have escaped relatively unscathed by social unrest in 2009, despite suffering the worst recession since the 1930s, it might just prove the lull before the storm.

Time to get armed? Kudos Nick! After reading the news,  I am thinking of buying some guns for myself…

Ten Predictions for 2010 – Written by Thomas Tan, CFA, MBA

President Obama’s Economic Agenda -(for some reason cannot embed the video, so follow the link) Watch from 2:43 to 4:57 – Peter Morici – “Nothing has changed, the bonuses to the banksters this year are bigger than the GDP growth in Q3…. one of the best places for Democrat to rise money was Wall Street. It is no accident that average pay at Goldman Sacks will be $700 000 ….

The Year for Plan B Ilargi: The major difference between Tim Geithner and me, apart from my obviously superior looks, is that he is willing to gamble double or nothing with your money and your lives, and I would not be. Or, as one might also put it, he thinks the risk of misery for millions of American people is less important than his own personal career. I do not.

The US economy has never been in a situation like the one it’s in now, and Tim has nothing to draw on. At least, he has no prior knowledge to draw on. What he does have is the freedom to spend trillions of dollars, and to do so largely unchecked, other than by people who think just like him. But it’s still gambling.

Atlanta to end 2009 with 20.2% office vacancy rate – Business is booming heh…

Survival+ Trends for 2010 – Good Read

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

Bankers Get $4 Trillion Gift From Barney Frank

By: admin
Published: December 30th, 2009

From Bloomberg
by David Reilly

Dec. 30 (Bloomberg) — To close out 2009, I decided to do something I bet no member of Congress has done — actually read from cover to cover one of the pieces of sweeping legislation bouncing around Capitol Hill.

Hunkering down by the fire, I snuggled up with H.R. 4173, the financial-reform legislation passed earlier this month by the House of Representatives. The Senate has yet to pass its own reform plan. The baby of Financial Services Committee Chairman Barney Frank, the House bill is meant to address everything from too-big-to-fail banks to asleep-at-the-switch credit-ratings companies to the protection of consumers from greedy lenders.

I quickly discovered why members of Congress rarely read legislation like this. At 1,279 pages, the “Wall Street Reform and Consumer Protection Act” is a real slog. And yes, I plowed through all those pages. (Memo to Chairman Frank: “ystem” at line 14, page 258 is missing the first “s”.)

The reading was especially painful since this reform sausage is stuffed with more gristle than meat. At least, that is, if you are a taxpayer hoping the bailout train is coming to a halt.

If you’re a banker, the bill is tastier. While banks opposed the legislation, they should cheer for its passage by the full Congress in the New Year: There are huge giveaways insuring the government will again rescue banks and Wall Street if the need arises.

Nuggets Gleaned

Here are some of the nuggets I gleaned from days spent reading Frank’s handiwork:

— For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system. Admitting you have a problem, as any 12- stepper knows, is the crucial first step toward recovery.

— Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.

— Oh, hold on, the Federal Reserve and Treasury Secretary can’t authorize these funds unless “there is at least a 99 percent likelihood that all funds and interest will be paid back.” Too bad the same models used to foresee the housing meltdown probably will be used to predict this likelihood as well.

More Bailouts

— The bill also allows the government, in a crisis, to back financial firms’ debts. Bondholders can sleep easy — there are more bailouts to come.

— The legislation does create a council of regulators to spot risks to the financial system and big financial firms. Unfortunately this group is made up of folks who missed the problems that led to the current crisis.

— Don’t worry, this time regulators will have better tools. Six months after being created, the council will report to Congress on “whether setting up an electronic database” would be a help. Maybe they’ll even get to use that Internet thingy.

— This group, among its many powers, can restrict the ability of a financial firm to trade for its own account. Perhaps this section should be entitled, “Yes,Goldman Sachs Group Inc., we’re looking at you.”

Managing Bonuses

— The bill also allows regulators to “prohibit any incentive-based payment arrangement.” In other words, banker bonuses are still in play. Maybe Bank of America Corp. and Citigroup Inc. shouldn’t have rushed to pay back Troubled Asset Relief Program funds.

— The bill kills the Office of Thrift Supervision, a toothless watchdog. Well, kill may be too strong a word. That agency and its employees will be folded into the Office of the Comptroller of the Currency. Further proof that government never really disappears.

— Since Congress isn’t cutting jobs, why not add a few more. The bill calls for more than a dozen agencies to create a position called “Director of Minority and Women Inclusion.” People in these new posts will be presidential appointees. I thought too-big-to-fail banks were the pressing issue. Turns out it’s diversity, and patronage.

— Not that the House is entirely sure of what the issues are, at least judging by the two dozen or so studies the bill authorizes. About a quarter of them relate to credit-rating companies, an area in which the legislation falls short of meaningful change. Sadly, these studies don’t tackle tough questions like whether we should just do away with ratings altogether. Here’s a tip: Do the studies, then write the legislation.

Consumer Protection

— The bill isn’t all bad, though. It creates a new Consumer Financial Protection Agency, the brainchild of Elizabeth Warren, currently head of a paneloverseeing TARP. And the first director gets the cool job of designing a seal for the new agency. My suggestion: Warren riding a fiery chariot while hurling lightning bolts at Federal Reserve Chairman Ben Bernanke.

— Best of all, the bill contains a provision that, in the event of another government request for emergency aid to prop up the financial system, debate in Congress be limited to just 10 hours. Anything that can get Congress to shut up can’t be all bad.

Even better would be if legislators actually tackle the real issues stemming from the financial crisis, end bailouts and, for the sake of my eyes, write far, far shorter bills.

(David Reilly is a Bloomberg News columnist. The opinions expressed are his own.)

Click on “Send Comment” in the sidebar display to send a letter to the editor.

To contact the writer of this column: David Reilly at

Last Updated: December 29, 2009 21:00 EST

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

Just Say “NO!” and Walk Away…

By: admin
Published: December 29th, 2009

It seems now days, that  no one feels obligated to fulfill the terms and responsibilities of a contract of any kind. Consider the article – Chinese firm says won’t pay Goldman on options losses.

A small Chinese power generator on Tuesday rejected demands from a Goldman Sachs unit to pay for nearly $80 million lost on two oil hedging contracts, part of a long-running dispute over how China deals with derivatives losses.

Goldman Sachs (GS.N) was one of the foreign banks, along with Citigroup (C.N), Merrill Lynch and Morgan Stanley (MS.N), blamed by the state assets watchdog for providing “extremely complicated” and difficult to understand derivatives products.

Yeah? Where was the (China’s) state assets watchdog, when the contracts were offered and signed? Now after the fact,  when the Chinese company lost money, they say they will not pay. What, if the bets were right and the option related derivatives  resulted in a profit? What if then the other side refused to pay?

The State Assets Supervision and Administration Commission said in September that it would back state-owned companies in any legal action against the foreign banks that sold them oil derivatives, which resulted in losses when oil prices dived late last year.

Nanshan said in October last year that two oil option-related contracts with J. Aron were signed by its officials without authorisation from the company. In December 2008 it said in a statement it had terminated the deals, and that it would not accept J. Aron’s demand for payment.

The Chinese government is willing to back  state-owned companies and they probably will –  by using  the leverage they have, by threatening to stop financing our economic suicide. And I do not have doubt in my mind, that our government will bend over and pressure the  US banks to accept a loss on those contracts or to accept a  partial payment from the US government instead payment from the  Chinese companies, that originally owe them on those derivative contracts.

And how in the hell you reject a contract, cause it was signed by companies officials, but without the company authorization and you  just terminate the contract in December 2008, when you see oil is at rock bottom and is not going up soon, because USA is in a Second Great Depression and the contract no more is even worth the paper that is written on… Convenient isn’t it?

The paragraph actually resembles  a gambler in a casino, who loses on stupid (speculative) bets and then calls the police and demand from them to arrest the casino owner and get his money back, because you see  – the owner have sold a fake chips, with a false hope (or promise), that the gambler had a chance of making real money…

Do not get me wrong … I have no doubt, that GS, Citi, ML,MS have done everything possible to push the sales of these derivatives, but that is why we have the so called “STUPID TAX” – the tax paid by someone, who has been so stupid, that made a stupid move. And these Chinese companies were stupid. They have to pay the tax, so they can learn and be aware for the next time.

Not paying the “stupid tax” results in morale hazard

And today we have plenty of it….

*note that morale hazard is different from moral hazard

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

Some TCE Random Thoughts…

By: admin
Published: December 29th, 2009

I wish I had more time to write, what I think about where we are headed as a country, but personal and other engagements are preventing me of doing so….

So here it is … thoughts about GOLD

*Gold probably is going higher… cause (it is what I read and what I think)

Reason 1 -The United Nations are producing bullion coins as world currency and also here

Wednesday, 16th December 2009 (2379 views)

The United Nations (UN) has licensed the minting of gold bullion coins bearing its logo to provide a “public option” world savings currency.

According to the Vancouver Examiner, Oro gold coins are hoped to contribute to making the UN better funded by 2015, with revenue rising by ten to 15 per cent.

The coins are set to be produced in Europe and then distributed globally, with any licensee able to produce such bullion under contract.

Armand Dufour of the European Bank says that he welcomes the introduction of the gold coins.

However, he goes on to add that there is a danger that if the US dollar weakens, there will be a strong move towards the Oro.

In turn this could potentially drive the value of the coin up to a level where international governments will not allow it to be circulated.

UN coins were previously made purely for commemoration in the 1970s, but they hold no monetary value.

Reason 2 – In The State Of Georgia USA, there is a bill that will make GOLD AND SILVER COINS legal tender as if they are equal to the fiat money. The PDF document is here

To amend Title 7 of the Official Code of Georgia Annotated, relating to banking and finance, so as provide a short title; to provide legislative findings; to define certain terms; to require any bank or lending institution serving as a depository for the state or any department or agency of the state to offer and to accept gold and silver coin for deposit; to amend Title 50 of the Official Code of Georgia Annotated, relating to state government, so as to provide legislative findings; to define certain terms; to require the exclusive use of gold and silver coin as tender in payment of debts by or to the state; to provide for related matters; to provide an effective date; to repeal conflicting laws; and for other purposes.



This Act shall be known and may be cited as the “Constitutional Tender Act.”


Title 7 of the Official Code of Georgia Annotated, relating to banking and finance, is amended by adding a new chapter to read as follows:


The General Assembly finds and declares that sound, constitutionally based money is essential to the livelihood of the people of this state, to the stability and growth of the economy of this state and region, and vitally affects the public interest. The General Assembly further finds that Article I, Section 10 of the United States Constitution provides that no state shall make anything but gold and silver coin a tender in payment of debts.

Didn’t have the time to research, if  the bill has been passed to become a law and also, I think  it is interesting to know, if other states are passing similar bills…

And I am not joking this is a real bill!!!

Reason 3 – reading these articles….5 Reasons Gold Is Going to Rise: A Response to Nouriel Roubini and Bankers and Economists Say Gold is a Bubble. Here’s Why You Should Ignore Them

So here it is … thoughts about the ECONOMY

*USA Economy is Doomed cause… (it is what I read and what I think)

Reason 1 – The slip knot around public deficits is going to strangle Western states and their social security systems

LEAP/E2020 believes that the global systemic crisis will experience a new tipping point from Spring 2010. Indeed, at that time, the public finances of the major Western countries are going to become unmanageable, as it will simultaneously become clear that new support measures for the economy are needed because of the failure of the various stimuli in 2009 (1), and that the size of budget deficits preclude any significant new expenditures.

Reason 2 – Trucking is DEAD = no demand of any kind (except government) and if you remember the USA’s GDP is 70 percent CONSUMER SPENDING…

I have made a pictures of a trucking hub, that belongs to one of the largest trucking companies in the USA and which  I pass almost every day.  I have noticed a big difference of how many trucks are stationary parked during 2008 – 2009.

Because of that I went and took a pictures December 21, 2009.

Right now I am having trouble with my camera and, that’s why even though I planed to upload the pictures before Christmas to show you , that there is no truck shipping  going on before Christmas  I wasn’t able to do so. Will do as soon I fix my camera.

Meanwhile why you should be concerned….Trucking companies are suffering loses because of the reduced consumer demand of goods, so they  borrow  money and as things are not getting better, they become easy pray for the banksters ….

There is a tremendous amount of reasons why you should be paying attention to the trucking industry at the current moment.Arrow Trucking just went down the drain on Thursday, December 24, 2009— halting all operations, canceling fuel cards, and telling drivers (by direction of Daimler Financial who funded the entire fleet of trucks) to return their rigs to the nearest Freightliner dealer and get a bus ticket home. I have recently seen this article concerning YRC Trucking (YRC Worldwide) and that GOLDMAN SACHS IS TRYING TO BANKRUPT YRC through bad derivatives and credit default swaps. Keep in mind that YRC(W) is the largest, most comprehensive network in North America and one of the largest in the world for that matter. IT IS OF GREAT CONCERN to pay attention to such a matter.

Trucking Bankruptcies threaten 3 major necessities:

  1. Food
  2. Goods/Materials (commodities necessary for everyday life [-life essentials/non-life essentials])
  3. Fuel Delivery

Why do you need to be concerned with YRC?……because when the trucks stop—

The American Trucking Association presents a sobering view of possible consequences to a partial or complete interruption to our nation’s trucking business. You should take a few minutes and read the entire paper

Also consider this article –  Warren Buffett Buys A RAILROAD? Berkshire Hathaway Acquires Burlington Northern Railroad

The biggest name in investing is making what he calls an “all-in wager” on the U.S. economy – $34 billion to own a railroad that hauls everything from corn to cars across the country.

…meaning that.. trucking is dead as he said in a college meeting in which he was guest  together with Bill Gates. He also said that he made the purchase of the rail road company because…

1 gallon of diesel fuel will move one ton 423 miles, which is far more efficient compared to moving products by tractor trailers on the highways

Reason 3 – For now consider these links as a good read and why I think we are screwed ….

Serious U.S. mortgage delinquencies up 20 percent

10 Industries That Will Lose The Most Jobs In Next Decade

Stores Face New Kind of Shopper

Hiring, Business Investment and Other Big Variables That Will Drive 2010 Economy

House Under Water: Walk Away?

will be back tomorrow some time after 8 pm ET

VN:F [1.9.22_1171]
Rating: 5.0/5 (2 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)
More on this topic (What's this?)
Has Gold & Silver Finally Bottomed?
Gold and Silver Are Crashing. What’s Next?
Gold Price Gravitating Lower Towards $1000
Read more on Gold at Wikinvest

After the Bailouts, Washington’s the Boss

By: admin
Published: December 28th, 2009

A must read…

From WSJ

In 2008 and 2009, Washington strove to save the economy. In 2010, Americans will get a clearer picture of how Washington has changed the economy.

Only as the recession recedes will it become fully evident how permanently the state’s role has expanded and whether, as a consequence, a new, hybrid strain of American capitalism is emerging.

One thing is clear: The government is a much bigger force in today’s U.S. economy than it was before the financial crisis. “The frontier between the state and market has shifted,” says Daniel Yergin, whose 1998 book “Commanding Heights” chronicled the ascent of free-market forces starting in the 1980s. “The realm of the state has been enlarged.”

To prevent crumbling housing and credit markets from sinking the broad economy, the Bush and Obama administrations and the Federal Reserve spent, lent and invested more than $2 trillion on one initiative after another. If you owned a credit card or a money-market fund, had a savings account, bought a Dodge pickup or even a hunting rifle, or borrowed to buy a home or finance a small business, odds are good that the U.S. stood behind you or the firm that served you.

Washington pumped $245 billion into nearly 700 banks and insurance companies and guaranteed almost $350 billion of bank debt. It made short-term loans of more than $300 billion to blue-chip companies. It propped up life insurers and money-market funds.

It bailed out two of the three U.S. auto makers. It lent billions trying to jump-start commercial-real-estate, small-business and credit-card lending. In two February stimulus bills enacted a year apart, the government committed $955 billion to rouse the economy.

Today the U.S. government, directly or indirectly, underwrites nine of every 10 new residential mortgages, nearly twice the percentage before the crisis. Just last week, the Treasury said it would cover an unlimited amount of losses at mortgage giants Fannie Mae and Freddie Mac through 2012.

Those who defend this robust interventionism and those who decry its effects are vying to shape the nation’s take on the events of the past 16 months.

Lawrence Summers, President Barack Obama’s chief economic adviser, says the intervention was essential, short-term therapy, not a reinvention of capitalism. “Our overarching goal was to save an economy that was near the abyss, where depression looked like a real possibility,” he says. By that measure, he sees success: “The kind of financial and economic collapse that looked very possible last fall appears remote right now.”

The bailouts “were designed to be, and have proved to be, temporary,” Mr. Summers says. “There is no aspiration of any kind to change the private-sector basis of our economy.”

Even so, he says government won’t return to its pre-crisis form. “The way our financial system was operating was much more fragile than many had supposed. Those events point up a need for substantial changes in the way in which we regulate the economy and regulate finance,” he says.

John Taylor, a former Bush Treasury official who is now a Stanford University economist, says the government’s role will be far greater than Mr. Summers suggests. “While we may be past the emergency, we’re still in a mode that will create similar interventions for quite a while, even for minor emergencies,” he says. “We have a bailout mentality in this country.”

One concern: Even if the government withdraws, business will expect bailouts in the next crisis, and that will inspire another round of cavalier risk-taking. “If we don’t re-regulate the banking system properly, we’ll either get very slow growth from overregulation, or another financial crisis in just 10 to 15 years,” says Kenneth Rogoff, a Harvard University economist and co-author of a new book on financial crises since the Middle Ages.

The story isn’t over yet.

Although the economy is growing, unemployment remains a very high 10%. It is far from clear how strongly the economy will grow when the adrenaline of stimulus is withdrawn.

In finance, the recovery has been striking. Since bottoming on March 9, the Dow Jones Industrial Average is up 60%, and financial stocks have more than doubled. Yields on junk bonds, issued by companies with the highest risk of default, have fallen from almost 17 percentage points above yields on Treasury bonds in March to about 6.5 points higher now. That signals both an improving economy and a renewed investor appetite for risk.

Most big banks appear back on their feet. Of the $245 billion invested in bank shares by the Troubled Asset Relief Program, more than $175 billion has been repaid. Since the Treasury tested the financial strength of 19 large financial firms in May, they have raised $136 billion in equity capital and borrowed $64 billion without U.S. guarantees.

But the strengthening of the big banks may be distorting the market. Although smaller banks have long had a higher cost of funds than big ones, the gap has widened. The gap averaged 0.03 percentage point for the first seven years of the decade, but it jumped to a 0.66-point disadvantage for smaller banks in the four quarters ended Sept. 30, estimates Dean Baker of the Center for Economic and Policy Research, a liberal think tank. That suggests investors think the government would bail out big banks, but not small ones, if crisis erupted anew, he says.

Not all of the rescues look successful. The U.S. had to redo its initial bailouts of giant insurer American International Group Inc. and of GMAC Financial Services, which was once a car-finance and mortgage firm and is now a bank holding company. Both remain unable to raise private capital.

The intervention comes with long-lasting costs, among them huge budget deficits that could eventually push up inflation and interest rates.

The International Monetary Fund estimates U.S. government debt will swell to the equivalent of 108% of annual economic output in 2014, from 62% in 2007, absent politically difficult steps such as raising taxes or cutting benefit programs. As federal debt climbs, an ever-greater fraction of the budget goes just to pay interest, much of it to overseas creditors. The bill will worsen if interest rates rise from their current low levels.

Interest on the debt cost $182 billion in the fiscal year ended Sept. 30. Robert Pozen, chairman of MBS Investment Management, worries that within a decade, the interest bill could rival the defense budget, which was $637 billion last year.

The interventions also carry political costs. Their chief architects — Fed Chairman Ben Bernanke, Treasury Secretary Timothy Geithner and former Treasury chief Henry Paulson — say saving Wall Street was essential to saving Main Street. Many Americans, and a vocal group of lawmakers, disagree.

Only 21% of Americans polled by The Wall Street Journal and NBC News in December said they trusted the government to “do what is right,” versus 64% shortly after the attacks of Sept. 11, 2001. In Congress, there is growing support for having the Government Accountability Office review the Fed’s monetary policy, a move the Fed says would crimp its independence.

For some businesses, Washington now looms larger, affecting everything from the choice of executives to the fate of car dealerships. U.S. Bancorp has repaid its TARP money, but CEO Richard Davis nonetheless checked with Fed regulators in December to make sure it would be all right for the Minneapolis-based bank to raise its dividend. “We are still awaiting this guidance,” Mr. Davis said in a statement announcing that the bank would retain its dividend level for now.

Bank of America Corp. also has repaid its aid, freeing itself from the condition lenders hate most about the bailouts: Treasury oversight of executive pay. Even so, it sought the Treasury’s advice on a pay package before hiring a new chief executive.

The bank was considering paying $35 million to $40 million to hire Robert Kelly, CEO of Bank of New York Mellon Corp., much of it to buy out his unvested shares and options. The Bank of America board wanted to know how that would go over in Washington. Treasury paymaster Kenneth Feinberg told the bank that if it were still under his purview, he would reject the package. Around the same time, President Obama publicly bashed “fat cat” bankers.

With those two signals, the talks with Mr. Kelly fizzled, according to officials involved with the decision. The bank instead promoted an insider, Brian Moynihan, who had been working to repair the bank’s reputation in Washington.

It thus chose a more politic man to lead it, post-crisis, than departing CEO Kenneth Lewis, who in a March meeting with the president had said he wouldn’t “suck up” to federal economic aides, according to people familiar with the exchange. Mr. Moynihan, by contrast, told Obama aides in October that Bank of America wanted to work with the White House to achieve U.S. policy goals in areas like small-business lending and foreclosure prevention. As for his pay, Mr. Moynihan asked that it be determined later.

In the insurance business, some of the strong are complaining that the U.S. is warping the market by keeping the weak on life support.

Edmund “Ted” Kelly, chief executive of Boston-based insurer Liberty Mutual Group, points to the case of competitor Hartford Financial Services Group Inc. After acquiring a thrift and qualifying as a bank holding company, Hartford got $3.4 billion of TARP funds in June

Liberty Mutual says it didn’t ask for cash, and doesn’t see why Hartford got any. “Nothing would have happened to the economy if Hartford failed,” Mr. Kelly said. Hartford declined to comment.

The nature of post-crisis capitalism will depend in part on how the administration and Congress wield their new power. Inside Washington, there is profound ambivalence about this. Should the government, for instance, be an activist shareholder demanding change, like a Carl Icahn, or a passive one like an index mutual fund?

Herbert Allison, who left the private sector to run TARP, says, “We can’t wait to get out of these investments. We don’t view ourselves as a long-term investor.” But in the here and now, the government is torn between its roles as shareholder and guardian of the public interest.

At Fannie Mae and Freddie Mac, where the Treasury holds warrants allowing it to acquire stakes of nearly 80%, the administration has put public interest first. It has instructed their regulator to have them administer efforts to cut monthly mortgage payments for millions of Americans to avert foreclosure.

The disagreements over how to wield power over business are playing out both within the Obama administration and between the administration and Congress — as is happening now in the auto industry.

The White House forced out a CEO of General Motors in March, and crafted car-maker bankruptcy restructurings that drew howls from some creditors. But it later lightened its hand. It appointed a board of private-sector directors and let that board oversee GM. The board, six months later, was able to fire a subsequent CEO without getting prior White House approval, according to Treasury officials.

Congress isn’t so willing to surrender its leverage. That was clear when GM and Chrysler decided to terminate about 3,400 dealers. Many turned to their lawmakers, and Congress got involved, prompting the companies to reinstate about 110. But the dealers felt that was insufficient.

GM’s frustration with the process boiled over at a mid-November meeting in the office of Sen. Richard Durbin (D., Ill.). GM’s usually cool-headed chief lobbyist, Ken Cole, was too agitated to sit, say several participants. When Tammy Darvish, an executive of a dealership in Silver Spring, Md., pressed Mr. Cole about whether it would cost the company any money to reinstate a terminated dealer, the GM team started to pack their briefcases and threatened to walk out, according to Ms. Darvish and a government participant in the meeting. They say the GM team stayed only at the insistence of congressional staffers.

Congress later enacted a provision giving axed dealerships broadened grounds to appeal in arbitration procedures — broader than the White House or car companies sought.

A spokesman for GM declined to comment on the dealers meeting or Mr. Cole. But the auto maker, now 60% federally owned, said the arbitration law will hurt its efforts to turn a profit and repay the government, which has invested roughly $50 billion in the company.

—Dan Fitzpatrick contributed to this article.

Write to Bob Davis at, Deborah Solomon at and Jon Hilsenrath at

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

‘I Want My Bailout Money’

By: admin
Published: December 28th, 2009

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

Recent Entries

Recent Comments

Social Network

the Cynical Economist at Blogged
Wikio - Top Blogs
Share Add to Technorati Favorites TopOfBlogs