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Ford, BMW, Toyota Took Secret Government Money

Old Dec 2, 2010 | 09:52 PM
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Ford, BMW, Toyota Took Secret Government Money



In the depths of the financial collapse, the U.S. Federal Reserve pumped $3.3 trillion into keeping credit moving through the economy. It eventually lent $57.9 billion to the auto industry — including $26.8 billion to Ford, Toyota and BMW.

The Fed on Wednesday was forced to reveal the identity of the companies it aided during the crisis, after contending to Congress that keeping their identities and the details of such lending secret was essential. Much of Wall Street, and corporate giants such as General Electric, Harley Davidson and McDonald's, took advantage of the Fed's help. We've done the math on how the Fed propped up the auto industry.

While Chrysler and General Motors had to go to Congress to beg for cash in 2008, every other automaker's finance arm was having trouble as well. Typically, once they lend money to a buyer, they sell the loan, get the cash upfront, then pump the proceeds back into the business. They also take out short-term loans called commercial paper that keeps the day-to-day business afloat. The crash cut the circuit, raising the chances the automakers couldn't make loans to buyers and keep selling new vehicles.

That's where the Fed stepped in. In normal circumstances, the Fed only lends money to banks, leaving the decisions about who should get credit to them. But when the financial markets started to collapse in late 2008, the Fed set up several programs to lend money directly to corporations, a highly unusual step.

According to the data, from October 2008 through June 2009 the fed bought $45.1 billion in commercial paper from the credit arms of four automakers - Ford, BMW, Chrysler and Toyota - along with GMAC (the former General Motors credit arm). Of those, Ford sold the most, with $15.9 billion.

The Fed also lent $13 billion to investors who bought bonds backed by loans to new car buyers from automakers and banks. The Fed made clear that while investors got the loans, the move was meant to keep the lenders in business; the credit arms of Ford, Chrysler, Nissan, Volkswagen, Honda and Hyundai all benefited directly. According to the Fed, the commercial paper loans have been paid in full, while some $2 billion remains outstanding on loans for bond investors.

Ford spokeswoman Christin Baker said the two programs "addressed systemic failure in the credit markets, and that neither program was designed for a particular company, or even a particular industry." Ford Credit had said it was taking part in both programs.

BMW told Bloomberg that the Fed lending "supported our financial profile and offered us an additional funding source, especially at times when the money markets and capital markets did not function properly and efficiently."

The secrecy surrounding the details of the loans only masked how much aid corporate America and Wall Street needed. While General Motors and Chrysler took the brunt of the blowback for relying on government handouts, the reveal of the Fed numbers show that a far bigger slice of the U.S. auto industry needed help.
http://jalopnik.com/5704575/
Old Dec 2, 2010 | 10:27 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

Our government gave money to BMW and Toyota?? WTF? Does BMW even have a single plant here?
Old Dec 2, 2010 | 11:10 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

Originally Posted by z28 justin
Our government gave money to BMW and Toyota?? WTF? Does BMW even have a single plant here?
Yes. BMW has had one in South Carolina since 1994.
Old Dec 2, 2010 | 11:22 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

Yes. BMW started built a plant here years ago in South Carolina because they thought it would be cheaper to make a few vehicles sold here locally compared to in Germany. I think the first car they made here was the 318's in 1994 followed closely by the Z3. Now they are the sole producer of the X3, X5 and X6 as their manufacturing strategy has changed slightly.
Old Dec 3, 2010 | 03:27 AM
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Re: Ford, BMW, Toyota Took Secret Government Money

I'm not suprised. It's not like Ford, BMW and Toyota got the same kind of help that GM and Chrysler did. But it's obvious now that the Fed helped just about every company who had their hand out, and probably several who didn't, in some way or another. Lets hope their master plan works out in the long run.

Last edited by 99SilverSS; Dec 3, 2010 at 03:33 AM.
Old Dec 3, 2010 | 07:39 AM
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Re: Ford, BMW, Toyota Took Secret Government Money

Originally Posted by z28 justin
Our government gave money to BMW and Toyota?? WTF? Does BMW even have a single plant here?
Yes they do about 4 miles down the road from me. Every BMW that comes into this country goes thru that plant for shipping out to different states. I worked there back in the late 90's on the Z3 convertible/ M coupe line in the body shop.
Old Dec 3, 2010 | 09:33 AM
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Re: Ford, BMW, Toyota Took Secret Government Money

Is it Greenville?
Old Dec 3, 2010 | 10:28 AM
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Re: Ford, BMW, Toyota Took Secret Government Money

Originally Posted by 95redLT1
Took "Secret Government Money"??

Give me a frigging break. There's nothing secret about it.

Ford's CREDIT got money to help when banks stopped lending.

So did GMAC.

BMW got tax breaks and money related to their operating a plant making BMW's here in this country. I'm sure the folks in South Carolina didn't mind.

The largest amount of money in those charts is 15.9 billion, and the title of the topic leads one to think that "Looky!!! Ford and these other guys got government money too.... and no one knew about it!"

Uh... no young grasshopper. It wasn't "secret".... and next to what GM got.

By the way, since we all most likely forgot, GM got at least $49 billion in loans prior to bankruptcy, then the Feds bought GM after bankruptcy for just over $60 billion.... total: $109 billion.

Do we really want to compare that to the $15 billion Ford's credit division got (and GMAC's almost 15 billion) let alone the mere $6.2 that went to BMW and the less than $5 billion Chrysler got?

Hell, GM's Zeta platform cost just over a billion and it was a unusually low cost car program.

15 years ago, Ford spent $2 billion (at least $5 billion in today's money) developing the old Contour/Mystique.... and that doesn't include the money invested in factories and machinary.

Not much of a story I'd say.

Last edited by guionM; Dec 3, 2010 at 10:35 AM.
Old Dec 3, 2010 | 01:05 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

Originally Posted by guionM
Took "Secret Government Money"??
Yes, I too got a chuckle from that title, but got sidetracked in my post about the South Carolina plant.

The title makes it sound like these guys were developing the Aurora or involved in reverse engineering a UFO.
Old Dec 3, 2010 | 01:06 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

Originally Posted by bossco
Is it Greenville?
Yes between Greenville and Spartanburg off of I-85. They just expanded it a few years ago and I think again recently.
Old Dec 3, 2010 | 02:29 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

So that guy with the "Ford: Built without your Tax Dollars" shirt needs to add a little asterisk and that says "sold with your tax dollars".

-Geoff
Old Dec 3, 2010 | 03:34 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

Originally Posted by WhiteHawk
So that guy with the "Ford: Built without your Tax Dollars" shirt needs to add a little asterisk and that says "sold with your tax dollars".

-Geoff
Old Dec 3, 2010 | 04:16 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

Guy,

I agree, it's a pittance compared to what GM has gotten -- but I do get tired of hearing Ford didn't take ANY government money.

In the immortal words of Everett Dirkson, "A billion here, a billion there -- pretty soon it adds up to real money."
Old Dec 3, 2010 | 04:33 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

Originally Posted by STOCK1SC
Yes between Greenville and Spartanburg off of I-85. They just expanded it a few years ago and I think again recently.
It's in Greer, but in Spartanburg County, and for some reason, instead of calling it the Greer Plant, it's called the Spartanburg Plant.

The new facility was opened around spring of this year. The new X3 is built exclusively there... for now. The "old" plant builds the X5, X6 and the hybrid versions, I believe of the X5 only? The paint and body shop was also expanded to accomodate the new plant.
Old Dec 3, 2010 | 06:57 PM
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Re: Ford, BMW, Toyota Took Secret Government Money

Originally Posted by guionM

By the way, since we all most likely forgot, GM got at least $49 billion in loans prior to bankruptcy, then the Feds bought GM after bankruptcy for just over $60 billion.... total: $109 billion.

Do we really want to compare that to the $15 billion Ford's credit division got (and GMAC's almost 15 billion) let alone the mere $6.2 that went to BMW and the less than $5 billion Chrysler got?
I have a great deal of respect for you Guy....but GM received $109 billion from the Feds? Unless you are counting GMAC your numbers are WAY off. GM received $20.57B prior to bankruptcy....

A quick Google search provides this info. The 1st link with Bloomberg.

http://www.lmgtfy.com/?q=before+dela...cy+gm+received

The debt owed to the Feds was converted to equity (stock in the company) They didn't buy them for another $60B...it was roughly $50B total

Also, there were no comparisons made of how much Ford got compared to GM. Fact is...no1 knew Ford got ANY money at ALL...

You're are quick to criticize GM with the bailout...but always take up for your baby Chrysler...how much of the bailout has Chrysler paid back now?

NEW YORK (CNNMoney.com) -- Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing
http://money.cnn.com/2009/05/05/news...hrysler_loans/

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