by Deb Cupples | In October, Congress committed 25 billion tax dollars to loans for America's "Big Three" automakers (Ford, GM, and Chrysler) and some suppliers, so that the companies could make more fuel-efficient cars.
Now, Chrysler wants 10 billion tax dollars to help the company merge with GM. At this point, the Treasury Department said "No."
When lobbying for the loans back in August, the Big Three also asked Congress to put looser restrictions on how the bailout funds would be spent. In other words, give us truckloads of money but keep quiet about what we do with it. How's that for corporate responsibility?
I was troubled by the idea of string-free loans, largely because of how some human beings that make GM's and Ford's decisions had spent some of those companies' money.
In 2007, for example, General Motors had record losses of about $38 billion. That same year, GM's CEO Rick Wagoner got a 41% raise (to about $14 million). While the CEO (and possibly hundreds of other execs and managers) were rewarded with pay raises as GM lost billions, the company laid off a couple thousand workers.
Layoffs are bad for our nation's economy.
In 2006, Ford Motor Company had record losses of more than $12 billion. Yet, the company gave its new CEO Alan Mulally $28 million for his first four months on the job. Mulally's total 2007 compensation was about $21 million. Four of Ford's executive vice presidents that year collectively took home about $39 million.
In short, just five Ford execs pocketed $60 million after a year of record losses. I don't know how much the hundreds of lower execs and managers pocketed.
How many essential workers or supplies could that $60 million have paid for?
These days, I'm troubled by corporate bailouts in general. The recent $700 billion bailout plan was sold to us taxpayers as an absolutely necessary means of getting banks to again start lending money to businesses, people, and other banks -- the goal being to unfreeze the credit market.
Less than a week ago, the New York Times reported that some corporations that received billions in bailout-funds aren't planning to use much of the money to start lending again:
"In his column on Saturday, The Times’s Joe Nocera told about a conference call that he had listened in on recently between employees and executives of JPMorgan Chase. Asked how an infusion of $25 billion of bailout funds would change the bank’s lending policy, an executive said the money would be used to buy other banks...."
"There was not a word about lending — not to businesses or home buyers or car buyers or students or other consumers. Just the opposite. In response to another question, the executive said that the bank expected to continue to tighten credit. (NY Times)
The news gets even worse, according to the Associated Press:
"[R]eports surfaced that bankers might instead use the [bailout] money to buy other banks, pay dividends, give employees a raise and executives a bonus, or just sit on it."
Why stop at reaming company shareholders when the Bush Administration and Congress have made us taxpayers such easy prey?
Other Buck Naked Politics Posts:
* Cutting Executive Pay Would Save Jobs
* Lehman Execs Redistribute Shareholder Wealth (to Themselves)
* AIG Execs Redistribute Shareholder Wealth (to Themselves)
* Execs Made Millions While Driving Companies into Ditch
* Are Bailout Funds Being Misused?
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