GOP wants to block “Euro bailout”

This is simply shortsighted, puts the cart before the horse and is, well, really inane. I abhor the idea that US dollars could be used to bailout foreign companies or governments, but the reality is we do it regularly. And whatever code words someone wants to throw around, like “new world order” to offer one example, we actually do live in a global economy where if any of its moving parts — US, Asia or yes, even the European Union — catastrophically fails, everybody else does, too. Ever try to drive a car with one blown-out tire?

From the link:

After a week of preemptive attacks on a possible IMF bailout of Greece, Rep. Mike Pence (R-Ind.) introduces the European Bailout Protection Act, aimed at preventing taxpayer dollars from going to a rescue plan.

“This legislation would require that countries like Greece cut spending and put their own fiscal house in order,” says Pence, backed up by other members of the House GOP, “instead of looking to the United States for a bailout. We face record unemployment and a debt crisis of our own, and American taxpayers should not be forced to bear the risk for nations that have avoided making tough choices.”

(Hat tip: Drudge Report)

GM lying about paying back fed bailout

To paraphrase Paul Harvey, here’s the rest of the story …

From the second link:

General Motors CEO Ed Whitacre has bragged in TV commercials and newspaper columns that GM has paid back its bailout “in full and ahead of schedule.”

As with the Pontiac Aztek, an ugly exterior masks an ever darker problem: Whitacre is being fanciful to the point of deceit. GM received $50 billion in TARP funds (never mind that TARP was only supposed to cover financial institutions). About $7 billion of that came in the form of a straight-up, low-interest loan. And about $13 billion came in the form of an escrow account.

So how has GM, which lost $38 billion in 2007 even as it sold 9.4 million cars, paid back its debt? It took money from the escrow account to pay back the $6.7 billion loan.

The bailout ROI

I dissed the entire bailout move and have now been proven beyond wrong. Who knows how we got to this point, but the return-on-investment has been dramatic.

From the link:

U.S. taxpayers earned an annualized 8.5 percent return from the government’s bailout of 49 financial firms, underscoring efforts by the industry to speed up repayments and warrant repurchases, according to a report by SNL Financial.

Firms such as Citigroup, (C) which still has common shares held by the U.S. Treasury Department, and rivals that have made partial redemptions were excluded from the analysis, SNL Financial said in a statement on Monday.

Proceeds from Troubled Asset Relief Program (TARP) warrant repurchases and auctions led to a surge in returns through March 30, SNL said. So far, since the start of the program in late 2008, 64 institutions have fully repaid government aid.

I’m not happy with the banking industry either, but …

… Geithner is absolutely correct on this tax proposal. All this would do is further economically depress the very people it’s designed to protect.

From the link:

With popular anger building as big banks show profits and pay sizable bonuses while unemployment remains high, the Obama administration has come under pressure at home and abroad to support a financial transactions tax on institutions and to heavily tax their executive compensation.

But the United States, led by the Treasury Secretary Timothy F. Geithner, has been opposed, arguing that a transactions tax would simply be passed on to customers and a bonus tax could be easily circumvented.

Banks v. homeowners

I’ve already blogged about what banks are doing to small business, and the overall economy as a result. Here’s more of the same tight-fisted lending practices (with those tight fists wrapped around taxpayer’s money via the various bailouts) geared toward homeowners looking to refinance during this time of ultra low interest rates courtesy of the government.

From the second link:

Mortgage rates in the United States have dropped to their lowest levels since the 1940s, thanks to a trillion-dollar intervention by the federal government. Yet the banks that once handed out home loans freely are imposing such stringent requirements that many homeowners who might want to refinance are effectively locked out.

The scarcity of credit not only hurts homeowners but also has broad economic repercussions at a time when consumer spending and employment are showing modest signs of improvement, hinting at a recovery after two years of recession.

TARP stopped an “economic panic” …

… as a starting point for the entire stimulus program according to a Congressional Oversight Panel audit, but the overall report card looks like a middling “cee” at best.

From the link:

The independent panel that oversees the government’s financial bailout program concluded in a year-end review that, despite flaws and lingering problems, the program “can be credited with stopping an economic panic.”

The Congressional Oversight Panel, which issued the report, was created in October 2008 by the same law that established the $700 billion Troubled Asset Relief Program. The panel has often been critical of the Treasury Department’s management of the bailout operation, especially at its start in the Bush administration but also under the Obama administration.

In the latest monthly report released on Wednesday, the panel again criticized the Treasury Department under Secretary Timothy F. Geithner for “failure to articulate clear goals or to provide specific measures of success for the program” as it has morphed over time from rescuing financial institutions to propping up securitization markets, auto manufacturers and home mortgages in danger of default. The panel also described the program’s foreclosure mitigation efforts as inadequate.

Mr. Geithner announced Wednesday that the administration would extend the bailout program until Oct. 3, 2010. In a letter, Mr. Geithner told lawmakers that the extension was needed to assist families and stabilize financial markets.

Another TARP bank pays the nation back

This week it’s Bank of America. Good to see the money back in public coffers, but this move doesn’t exonerate the company for its malfeasance over the past year. At any rate it’s another $45 billion in bailout dollars the taxpayers get back, plus an extra $2.54 billion in Treasury payments.

Of course do you think BofA, or any other of the TARP banks for that matter, would be magnanimously paying the public back so quickly if the Feds hadn’t cracked down this year and seized control of executive pay and other business functions? I want the banking industry working outside of government influence, but I also want the banking industry working without using public money with no-strings-attached.

Small business loans down over $10B

Yep, you read that header correctly — more than ten billion dollars of available credit has disappeared for small business while Wall Street and big banking rolls in federal funds.

Disappointing.

From the link:

The 22 banks that got the most help from the Treasury’s bailout programs cut their small business loan balances by a collective $10.5 billion over the past six months, according to a government report released Monday.

Three of the 22 banks make no small business loans at all. Of the remaining 19 banks, 15 have reduced their small business loan balance since April, when the Treasury department began requiring the biggest banks receiving Troubled Asset Relief Program (TARP) funding to report monthly on their small business lending.

TARP recipients to get White House mandated pay cut

I’m no fan of the government telling a business how much it’s going to pay executives, but you have to say the major TARP recipients brought this on themselves. After the forced bailout (most of these players had no choice but to go along with the bailout) the situation became no longer business as usual. Somehow that point was lost on the C-level at Citigroup, BoA, GM, Chrysler, GMAC, Chrysler Financial, and especially AIG. The end result? The pay packages of 175 top executives are going to start seeing much lighter pay checks.

Cue an entire chorus of nanoscale violins.

From the link:

The Obama administration will soon order the nation’s biggest bailed-out companies to drastically cut the pay packages of 175 top executives, a senior administration official confirmed to CNN Wednesday.

Kenneth Feinberg, who was named the White House’s pay czar in June, will demand that each of the seven largest bailout recipients lower the total compensation for their top 25 highest paid employees by 50%, on average, the official told CNN.

And here’s the big number:

Under the plan, which is expected to be officially released by the Treasury Department next week, annual salaries for executives at those seven firms are expected to fall 90%, on average, the official said.

TARP banks not lending to Main Street

I’ve already blogged on the upside of this issue — that is, the Obama administration is helping Main Street through expanding the lending capacity of the Small Business Administration and letting smaller banks in on some TARP action. The downside of this issue is eight of the top ten TARP recipient banks have cut small business loans since May. And that is disgusting.

From the second link:

The TARP program was set up to recapitalize banks so that they would bolster their lending to consumers and small businesses. In March, as the administration and the SBA took steps to stimulate small business lending, Treasury Secretary Tim Geithner ordered the top TARP recipients to begin sending the Treasury monthly reports on their small business lending activity.

“We need every bank in the country to do everything in their power to provide the credit that small businesses need to operate, expand and add jobs,” Geithner said as he announced the new requirements. “Given the role many banks played in causing this crisis, you bear a special responsibility for helping America get out of it.”

But in the five months they’ve been sending in those reports, the 22 biggest TARP recipients haven’t increased their small business lending. Instead, they’ve cut their outstanding balances by $8 billion. As of Aug. 31, the 22 reporting banks held a collective small business loan balance of $261.3 billion, down 3% from when they began reporting in April.

Check out this list of shame:

Treasury blasted on TARP transparency

And rightly so. When the government hands out $700 billion with essentially no debate as was the case a  little over a year ago, the public deserves to know where that money went and the government damn sure better be able to account for every cent. Or at least every $100,000.

From the link:

In a scathing report out Wednesday, a government watchdog blasts the Treasury Department for its handling of a $700 billion bailout program and for not adopting all of its earlier recommendations.

Special Inspector General Neil Barofsky, who is in charge of overseeing the Troubled Asset Relief Program (TARP), said Treasury’s failure to provide more details about the use of TARP funds has helped damage “the credibility of the program and of the government itself, and the anger, cynicism, and distrust created must be chalked up as one of the substantial, albeit unnecessary, costs of TARP.”

Barofsky has made 41 recommendations to better implement the program, of which Treasury has executed 18 and partially adopted seven.

One proposal calls for Treasury to require all of the hundreds of TARP recipients to report how they use the funds, which the Treasury has applied to only three of the largest recipients —American International Group,Citigroup and Bank of America.

Barofsky also describes at least nine unimplemented proposals, saying their adoption “could help bring greater transparency to TARP and answer some of the criticisms of the program.”

Too big to fail …

… and too much arrogance not to use our tax dollars to run up huge year-end bonuses. I know that’s an overstatement and Wall Street compensation is pretty arcane, but the message Main Street is going to get when the final numbers come out is one big middle finger from Wall Street.

If I were Goldman Sachs I’d ramp down a whole lot lest the heavy hand of a Democratic Congress and White House take unwanted action interfering with business as usual on the Street.

Call it what you want — balls, chutzpah, hubris, whatever — it’s very, very bad pubic relations, very questionable internal policy to continue the old ways when the entire game was changed by last year’s bailout, and frankly I think the best description for Goldman’s feeble justification is blind stupidity.

From the link:

As Wall Street firms typically do, Goldman set almost half that sum aside to compensate its workers. Through the first nine months of 2009, the firm socked away $16.7 billion, enough to pay the average Goldmanite $526,814.

The bonus pool is on pace to hit $21 billion for 2009, which would match the record bonus payout of 2007.

Goldman said it won’t decide the size of the bonus pool till year-end. In any case, the payments will be substantial — and will come just one year after huge sums of taxpayer dollars were funneled to financial institutions.

Critics charge that the lion’s share of Goldman’s profits comes from making big bets using cheap dollars printed by the Federal Reserve. Plus, given the crisis that followed the failure of Lehman Brothers, there’s a sense that government officials won’t let big firms go bust. That in effect gives too-big-to-fail firms a license to bet the house.

“This is almost an ‘in your face’ kind of setup here,” said Michael Panzner, a Wall Street veteran who blogs at financialarmageddon.com and who wrote a 2007 book predicting economic disaster. “They’re rolling the dice, and so far they’re winning,” said Panzner.

The Treasury Department lied …

… pushing through the TARP bailout a year ago? I’m shocked (er, not really).

From the first link:

A government watchdog says federal officials weren’t entirely honest with the public about the health of the first 9 financial firms that got federal bailouts, according to a report released Monday.

Bailout special inspector general Neil Barofsky says in an audit that Treasury Department officials painted an overly rosy picture, creating “unrealistic expectations,” when they called the first bailout banks “healthy” institutions that would be able to lend more with government help.

“It is not our intent to suggest that government officials should make public their concerns over the financial health of individual institutions, but rather that government officials should be particularly careful, even in a time of crisis, of describing their actions (and the rationales for such actions) in an accurate manner,” the report stated.

Treasury appeared to disagree with the assessment of the Special Inspector General of the Troubled Asset Relief Program (SigTARP), saying “people may differ” on the phrasing of the original bailout announcements.

TARP turns one — a birthday with no candles, no cake from me

TARP, the original bailout jammed through in a blind panic, turns a year-old tomorrow. Its expiration is scheduled for the end of the year unless Treasury Secretary Tim Geithner decides to keep it rolling.

From the link:

As of Saturday, it will have been a year since the U.S. Congress created the $700 billion Troubled Asset Relief Program, originally intended as a bailout just for the financial system.

Emphasis might be placed on the word “Troubled,” as TARP has been plagued by controversy since conception. For the past year, the Bush and Obama administrations have used the program as a bailout smorgasbord, with entrees for the auto and mortgage industries, the securitization market for consumer goods, American International Group (See “What AIG Really Owes Taxpayers”) and the banking sector at large. Toxic assets remain on bank balance sheets, Congress is still busy plugging TARP’s holes on executive compensation limits and the program is a significant part of the country’s projected $1.6 trillion deficit for 2009.

Shortsighted CEOs

Or was it nearsighted? Or maybe just plain blind as bats. At any rate this is a humorous, and sad, collection of quotes from erstwhile kings of Wall Street.

From the link:

Richard Fuld, Lehman Brothers: “Our core franchise and our culture are strong. Our capital and liquidity positions have never been stronger.”—June 16, 2008, on a conference call with analysts

What happened next: With clients pulling their money from Lehman accounts, the firm ran short of cash. Fuld reportedly turned down a financing offer from Warren Buffett, perhaps because he thought a government bailout—like that of Bear Stearns—would come with better terms. But no bailout materialized, and Lehman filed for bankruptcy on Sept. 15, 2008.

Consumer spending not returning anytime soon

[Note: this post was lost in WordPress somehow. Hit this link for new post sans my expanded commentary from the lost original.]

Here’s a handy bailout tracker …

… from CNNMoney.

Want to see what’s happening with all that bailout money and what’s gone where with Troubled Asset Relief Program, Federal Reserve rescue efforts, Federal stimulus programs, FDIC bank takeovers and other financial and housing initiatives, plus the dollars handed over to Amerian International Group, take a few minutes and hit the link.

“Cash for Clunkers” too popular

Rendering visible a point long obvious — Main Street needs, wants and will put to good use federal bailout money.

From the link:

The House rushed Friday to pump $2 billion into a popular cash-for-clunkers program running near empty, with a leading Democrat saying ”consumers have spoken with their wallets.”A floor vote was under way at midday on the bill to refuel the car-purchase program. House Majority Leader Steny Hoyer had said earlier that the additional money would come from funds Congress approved earlier in the year as part of a $787 billion economic stimulus bill.

Hoyer, D-Md., said that at the request of House Republicans — whose approval was required for swift passage — the bill would include provisions for government auditors to make sure the money was being spent as intended.

GM’s bankruptcy and Ford

To anyone who’s been paying attention General Motors’ bankruptcy comes as no no surprise, but the repercussions are still a mystery. Cato’s Daniel Ikenson brings up a very salient point — now that the government is the de facto owner of GM what’s going to happen to Ford.

Of the big three Ford has remained in a fairly strong position in a very weak industry. Most importantly it hasn’t been forced to take federal bailout money. Ikenson wonders if the fed may not put a thumb on the scales a little to help its latest property, namely GM, out a bit.

From Cato Today:

BANKRUPTCY FOR GM – FORD NEXT?

General Motors on Monday filed for bankruptcy protection, even after $19.4 billion in federal bailout money. Cato scholar Daniel Ikenson has long suggested bankruptcy as the best course for GM, and now worriesabout Ford’s future: “The government has a 60 percent stake in GM. Who’s going to want to own Ford stock—and therefore, will Ford be able to raise capital—when the U.S. government has an incentive to tip the balance in GM’s favor wherever it can?”
– Full statement from Ikenson
– “An Overdue Reckoning in the Auto Sector,” by Daniel Ikenson
– “Don’t Bail Out the Big Three,” by Daniel Ikenson
– “GM’s Last Capitalist Act: Filing for Bankruptcy Protection,” by Daniel Ikenson

GM sales way down

I really don’t see how General Motors can be considered a viable company right now. The bailout money that is basically already gone went solely toward paying bills and keeping the doors open. The very definition of a company running in the red.

From the link:

General Motors Corp. led the slide with a 45 percent U.S. sales plunge compared with a year earlier, while Ford Motor Co. reported a 41 percent drop. Sales at Toyota Motor Co. and Chrysler LLC both dropped 39 percent, while Honda Motor Co. reported a 36 percent decline.

Detroit-based GM sold a total of 155,334 light vehicles, while Ford sold a total of 131,102. Ford’s total came in slightly below that of Toyota, which reported U.S. sales of 132,802 units.

House votes to tax AIG bonuses

To the tune of 90 percent. We’ll see if the Senate does likewise and this bit of taxpayer outrage becomes a reality. I don’t like government being used in this fashion, but AIG is a pretty unsympathetic victim.

From the link:

Spurred on by a tidal wave of public anger over bonuses paid to executives of the foundering American International Group, the House voted 328 to 93 on Thursday to get back most of the money by levying a 90 percent tax on it.

AIG is wasting taxpayer money

Corporate socialism must be stopped. Legal obligations for the bonus money? The company wouldn’t even exist if taxpayer money wasn’t handed to it.

From the link:

Obama administration officials and lawmakers lambasted plans by American International Group Inc., the insurer rescued by the government, to dole out $1 billion in bonuses and retention pay to employees.

Lawrence Summers, director of the White House National Economic Council, called the payments “outrageous” in an interview on ABC’s “This Week” program. AIG is “abusing the system,” Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee, told “Fox News Sunday.”

AIG, which has received $170 billion in taxpayer money, succumbed to demands from the U.S. Treasury to scale back the payments. AIG agreed to reduce some retention payments in 2009 by 30 percent and tie bonuses to the company’s recovery. The New York-based insurer still plans to hand out about $165 million on March 15 because of legally binding contracts, according to a person briefed on the matter.

Update 3/16/09 —  Looks like the Obama administration is going to fight the bonuses taken from taxpayer money.

GM’s books look bad

Very bad according to its auditors. General Motors may fail after all. I can’t see any argument for propping up a firm weaker than wet tissue. Too big to fail? Maybe more like too screwed up to save.

From the link:

General Motors Corp.’s auditors have raised “substantial doubt” about the troubled automaker’s ability to continue operations.

The company revealed the concerns, raised by the accounting firm Deloitte & Touche LLP, in its annual report filed on Thursday.

GM has received $13.4 billion in federal loans as it tries to survive the worst auto sales climate in 27 years. It is seeking a total of $30 billion from the government. During the past three years it has piled up $82 billion in losses, including $30.9 billion in 2008.

GM says in its report that its auditors cited recurring losses from operations, stockholders’ deficit and an inability to generate enough cash to meet its obligations in raising substantial doubts about its ability to continue as a going concern.

The company said in its filing that its future depends on successfully executing the viability plan submitted to the government in February to justify the loans.

“If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code,” GM said in the annual report, filed with the U.S. Securities and Exchange Commission.

Banks want backsies

Oh, now they see the light since Bush’s blindly giving team is gone and Obama’s group demanding oversight with teeth is in place.

I hope these banks are able to repay the taxpayer’s money very quickly. I predicted some of the oversight rules put into place by the new economic team might cause some executives to see the capitalist light and decide the public dole of corporate socialism wasn’t so great after all.

Heh.

From the link:

Even before the government announced its latest efforts to fix the troubled banking industry on Tuesday, executives at Goldman Sachs and Morgan Stanley said they wanted to repay the money quickly. Both banks received $10 billion under the first rescue plan last fall.

Paying back all those funds would be difficult in this tough economic environment. But banking executives worry that the government may intrude further into their businesses as long as they are beholden to Washington.

Geithner to announces latest bailout on Monday

This ought to be interesting. Bush’s sad sack team had their shot, now Obama’s team begins in earnest. I honestly don’t know what the answer is here, or that there is an answer for that matter. I do know I’m not alone in having deep suspicion and reservations about all this corporate socialism.

I wish Geithner and the rest of Obama’s team the best of luck. Anyone who hopes for failure (read: Rush Limbaugh and other nut jobs on the right) is only hoping for the failure of the United States.

From the link:

Treasury Secretary Timothy Geithner and other top officials are putting the finishing touches on a plan to overhaul the U.S. government’s $700 billion financial rescue program.

A Treasury official said Geithner will deliver a speech on Monday outlining the new plan.

But Treasury officials would not comment on a report Thursday that the administration is considering proposing changes to the current accounting standard that require banks to carry assets such as mortgage-backed securities on their books at fair value, a process known as “mark to market.”

Critics of this process contend that it has made the current financial crisis worse by forcing banks to slash the value of assets that are currently depressed because of market conditions. Treasury officials said the administration’s plan was not yet complete and would be revealed in Geithner’s speech in Washington next week.

Geithner met Thursday with Federal Reserve Chairman Ben Bernanke and other officials who serve on the President’s Working Group on Financial Markets. The group was formed in the wake of the 1987 stock market crash with the goal of better coordinating the government’s response to market crises.

“This is a critically important group,” Geithner told reporters before the meeting began. “Together this group has the authorities and instruments and experience and talent that are going to be critical to helping solve the financial problems facing our country.”

Wall Street Journal hits back at Obama’s exec cap

Not surprising. Some good points are made here, but the reality is this move is largely symbolic and if anyone thinks C-level compensation will actually significantly fall is deluded.

Base pay may be much lower, but overall compensation will still be there through all the loopholes that are wide open and easy to see already.

From the WSJ link:

The Obama administration had to do something. But capping executive pay at $500,000 at banks needing “exceptional assistance” could create as many problems as it solves.

First, it could distort labor markets. Employees and executives will be tempted to flee troubled banks to subsidiaries of foreign banks or stronger U.S. institutions. That could make the weak even weaker.

Second, the plan caps pay for top employees. It doesn’t yet address the arguably more important issue of generous pay structures lower down organizations. The cap could encourage those in, say, better paying jobs running big departments at an investment bank to shun top positions where pay would be limited.

Half million cap on bailout exec salaries

A bold move by Obama. Not sure if I agree with the government-imposed salary cap, but I do agree with the concept in spirit. If nothing else this might knock down the number of corporate begging hands out there.

Instead of stealing from taxpayers, some C-level execs might just think they can keep their salary and right the ship themselves. You know, let capitalism work the way it’s supposed to work.

From the link:

President Barack Obama on Wednesday imposed $500,000 caps on senior executive pay for the most distressed financial institutions receiving federal bailout money, saying Americans are upset with “executives being rewarded for failure.”

Obama announced the dramatic new government intervention into corporate America at the White House, with Treasury Secretary Timothy Geithner at his side. The president said the executive-pay limits are a first step, to be followed by the unveiling next week of a sweeping new framework for spending what remains of the $700 billion financial industry bailout that Congress created last year.

The executive-pay move comes amid a national outcry over huge bonuses to executives heading companies seeking taxpayer dollars to remain afloat. The demand for limits was reinforced by revelations that Wall Street firms paid more than $18 billion in bonuses in 2008 even amid the economic downturn and the massive infusion of taxpayer dollars.

“This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success,” Obama said. “But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.”

Update — the Wall Street Journal hits back.

Those Wall Street bonuses

There’s been a lot of ink — actual and virtual — spilled over the bonuses paid out on Wall Street, particularly after the bailout. I’ve been guilty of the very thing even though I knew the reality wasn’t nearly as bad as it was easy to make it seem.

To my defense I only complained about post-bailout bonusing that either just looked very bad PR-wise, or came from companies that wouldn’t have any money to bonus with at all if that cash hadn’t come from the taxpayers pocket.

At the same time I never spent much time on the other side of the coin. A good example is a holiday party mid-December where I spent a good while talking to a trader at a major, and solvent, investment banker who is getting stiffed for six figures of earned bonuses over all of last year because of the bailout and various terms and conditions placed on his firm. He earned the money long before the crisis or bailout, but won’t see a penny of it.

Here’s a CIO.com article with some facts and figures on Wall Street and bonuses. It might open a few eyes.

From the link:

By now I’m sure you’ve all heard about the $18.4 billion worth of bonuses that Wall Street firms paid out to employees in 2008. Here are a few facts about that $18.4 billion—and Wall Street bonuses in general—that you may not know:

• The $18.4 billion bonus pool was spread out across all Wall Street employees; it didn’t just go to top executives (if that’s any consolation), some of whom wisely forfeited their bonuses for the year, according to the New York State Comptroller’s Office, which broke the news about Wall Street bonuses on January 28.
• A total of 165,000 employees benefitted from the bonus money, according to the Comptroller’s Office.

GM keeps hand out, sheds a tear

It never stops with these guys.

Unbelievable.

From the link:

General Motors, which is borrowing $13.4 billion from the federal government to remain solvent, is pressing Congress to waive a tax liability of as much as $7 billion related to the overhaul plan that it is completing this month, people with knowledge of the discussions said on Sunday.

The tax bill, which could be enough to force the company into bankruptcy, would be a consequence of the terms that the Treasury Department required as part of the rescue package approved last month by the Bush administration. In accepting the loans, G.M. pledged to persuade its creditors to swap a large chunk of the automaker’s debt for equity in the company.

 

The equity-for-debt exchange is aimed at ensuring G.M.’s viability in the future, but under corporate tax law, the swap would amount to debt forgiveness and count as income for G.M. The resulting tax bill could take G.M.’s cash level below the minimum needed for daily operations.

G.M. is lobbying Congress to reduce or eliminate the tax liability, said people with knowledge of the effort, who spoke on the condition of anonymity because the discussions were private. The Detroit News first revealed the lobbying effort on Friday.

Wall Street ought to burn …

… for this. Given the circumstances, this level of bonusing is inexcusable and if the bailout, SEC and Fed have any teeth at all, this should be punished. I’m a capitalist, and when my business is on rough waters I simply don’t make as much money. I certainly don’t get “bonuses” for failure.

The Wall Street bailout was one of the final shameless and shameful acts of the Bush 43 administration.

From the link:

By almost any measure, 2008 was a complete disaster for Wall Street — except, that is, when the bonuses arrived.

Despite crippling losses, multibillion-dollar bailouts and the passing of some of the most prominent names in the business, employees at financial companies in New York, the now-diminished world capital of capital, collected an estimated $18.4 billion in bonuses for the year.

 

That was the sixth-largest haul on record, according to a report released Wednesday by the New York State comptroller.

While the payouts paled next to the riches of recent years, Wall Street workers still took home about as much as they did in 2004, when the Dow Jones industrial average was flying above 10,000, on its way to a record high.

Some bankers took home millions last year even as their employers lost billions.