By Chris Haak

Probably due to its much larger size, GM’s bailout and repayment of some government loans has drawn far more attention than the assistance provided to Chrysler has for the past several years.  Chrysler doesn’t even get the perk of a derogatory nickname like “Government Motors” has.

Former “Car Czar” Steven Rattner’s book described how the Obama administration was split nearly 50-50 on whether Chrysler was even worth rescuing, and not everyone is certain of the viability of the now Italian-American automaker in the coming years.

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By Brendan Moore

The chatter in Washington is that the U.S. Treasury Department is going to sell most of its shares it received in General Motors stock in 2009 as part of the auto industry bailout package, perhaps as early as this summer. The reasons are either political or financial, depending on whom you ask. Some will tell you that the Obama administration wants the sale this year so that the federal bailout of GM is a non-issue in the 2012 presidential election, and some say that the sale is going to happen this year because the Treasury department thinks the current stock price is as high as it’s going to get for the foreseeable future.

Either way, unless the share price climbs above an unlikely $53 a share before the sale date, the Treasury’s dream of making a profit on the bailout is not going to be realized. At $53 a share, the federal government breaks even on the $50 billion it “loaned” GM, but at the current share price of approximately $30 (well below the $33 IPO price of last November, which raised around $20 billion), taxpayers would lose around $11 billion.

The U.S. Treasury currently owns 500 million shares of the reconstituted GM, which represents 33% of the company’s worth.

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By Chris Haak

Toronto-Dominion, the second-largest bank in Canada based on deposits, announced today that it has acquired Chrysler Financial.  Chrysler Financial has had a number of ups and downs over the past few years, but the entity is clearly ending its life on an “up” note.  Toronto-Dominion is better known in the US as TD Bank.

Previously the captive finance arm for Chrysler and its various brands, Cerberus purchased the lender along with Chrysler’s automotive operations in 2007.  Partially due to Chrysler’s struggles, and partially due to the financial crisis, Chrysler Financial was undergoing major struggles.  As Chrysler exited bankruptcy, Chrysler Financial lost its status as Chrysler’s captive-finance arm, with that role moving to GMAC instead under the government’s direction.  Chrysler Financial executives declined to accept TARP funds to shore up the company’s balance sheet, and it looked like the firm would be liquidated.  It was generating little new business and seemed to have dim prospects for the future.

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By Chris Haak

Less than a year and a half after its predecessor, General Motors Corporation, collapsed under the crushing weight of declining sales and market share, unsustainable debt levels, and enormous labor costs, General Motors Company has completed its initial public offering.  Starting this morning, you can hit up your broker for a few shares of GM (the company got its old ticker symbol back) and ride what may or may not be the company’s ascent toward business success.

The company sold 478 million shares yesterday, priced at $33 per share.  That price was well above the original expected price range of up to $27 per share, and also at the top end of the revised $30-33 per share.  The revised range, and the higher price, reflect considerable IPO demand for GM’s stock.  On top of the 478 million shares, GM’s bankers were expected to also sell another 71.7 million shares as an “overallotment,” which is allowed when demand for shares is stronger than expected.  The 478 million shares raised $15.774 billion, and the 71.7 million shares raised another $2.366 billion, for a total common stock sale of $18.14 billion.

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By Charles Krome

Let me deal with one thing before I even start: I was definitely in with the bailout crowd back during the depths of the global economic meltdown, and I remain a firm believer in government providing the occasional boost to U.S. industry. But that being said, I’m starting to get a bad feeling about how things are playing out at General Motors.

Consider: The General recently teased its third-quarter financial results—the final numbers will be released on Wednesday—and the early line is that the company expects to see a “net income attributable to common stockholders” of about $2 billion. That’s a swing of more than $3 billion as compared to GM’s results during the same time last year, although the automaker’s 2009 third-quarter numbers were more hazy and haphazard than usual, due to the whole “going through bankruptcy” business.

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By Chris Haak

Less than a week after the German government declined to provide the state aid that Opel requested to partially fund its restructuring, GM’s European arm has decided to withdraw all requests for state aid.  Instead, the automaker will fund its €3.6 billion restructuring program with money from the parent company, according to GM Europe CEO Nick Reilly (pictured).

Though the company did not say so, most of the change of heart is probably an attempt to shed the “loser” image that Opel increasingly seems to find associated with itself, as its initial request for aid dates back prior to GM’s bankruptcy, or more than a year ago.  In the ensuing months, Opel has begged, pleaded, and cajoled Berlin – not to mention other European capitals and other German state capitals – to open the purse strings to improve Opel’s competitiveness, from a cost and a product standpoint.

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By Chris Haak

Back in 2006 when GM sold a 51 percent controlling stake in GMAC to a consortium led by Cerberus Capital Management, many saw it as a sign that the company was desperate to sell any assets that it could to raise cash and hopefully stave off bankruptcy.  The term “crown jewel” was often thrown about when referring to GMAC, since GM’s captive-finance arm had been a steady profit-generating machine for the automaker for years.  In fact, absent GMAC’s contributions, GM’s automotive operations on their own had much trouble standing up.

In the ensuing three years, both GM and GMAC (recently renamed “Ally Financial” in the past week) have both become wards of the Federal government and have received billions of dollars in aid.  The government owns 61 percent of GM and 53.8 percent of Ally Financial.  Chrysler Financial is being wound down, with GMAC (which, for the time being, has kept its name for automobile finance) becoming the de-facto captive finance company for Chrysler dealers as well.

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But of course, there’s a catch.

By Chris Haak

US Treasury Secretary Timothy Geithner told the Senate Appropriations Subcommittee that taxpayers were still at risk of loss from the investments that the US government made in GM and Chrysler, but that any potential loss would be just a fraction of the original amounts feared.  He also said that there was a “reasonable chance” that both GM and Chrysler would be recouped.

However, it’s important to hone in on specifically what he said.  He said there was a “reasonable chance now that we will recover all of the dollars we put into these companies” since January 2009.  Of course, on January 20, 2009, the Obama administration took office.  The key phrase (which I italicized above) is “since January 2009.”  (Alternately, “we put into these companies” would work, if “we” in that context is the Obama administration.

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By Chris Haak

It doesn’t seem as if things could go much better for Ford these days, particularly in terms of relative performance.  While its crosstown rivals are still struggling from either buyer apathy, taxpayer ire, or a dearth of new products, Ford has clearly pulled away from the pack in the past two quarters.  Its first quarter 2010 financial results underscore that point.

The company reported this morning that it posted net income of $2.1 billion USD for the quarter, up from a loss of $1.4 billion in Q1 2009.  Revenue rose to $28.1 billion this year from $24.4 billion in the year-earlier period.  The company’s automotive operations had a pre-tax operating profit of $1.2 billion, against a loss of $1.9 billion a year ago.  Automotive cash declined slightly from Q4 2009 to Q1 2010, from $25.5 billion to $25.3 billion.  At that burn rate, which has slowed dramatically, Ford is in a very solid position.  Too, CFO Lewis Booth attributed the $200 million cash decline to depleting its year-end inventory and building up new vehicles for the 2010 model year.  Mr. Booth asserted that the company has positive cash flow; this is anotherr example of the hazards of quarter-to-quarter comparisons.

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By Chris Haak

The Congressional Oversight Panel, created by Congress to oversee the Treasury’s spending of Troubled Asset Relief Program (TARP) money, said late last week that GMAC could have been required to undergo a quick-rinse bankruptcy similar to what GM and Chrysler did last year. Bankruptcy would have allowed GMAC to shed itself of the millstone of its troubled non-core ResCap division, which continues to lose considerable amounts of money thanks to bad mortgages that it assumed during the real estate boom years.

The panel, chaired by Elizabeth Warren – an attorney and Harvard law professor – also criticized Treasury for not requiring GMAC to have a viable business plan in place going forward, despite receiving its first bailout money more than a year ago. To date, GMAC has received more than $17 billion USD from the US government to prop up the company’s finances. Both Treasury and the company assert that it is now solvent and will not require any additional bailout funds, but the Office of Management of Budget estimates that the government will never recover $6.3 billion USD of the money given to GMAC.

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