An automobile dealership in Orland, California which closed after General Motors cut ties with it and several hundred other dealers as part of its Chapter 11 bankruptcy restructuring efforts in 2009. Photo from www.wikipedia.org
When it comes to brand loyalty and fans of the other automakers, GM always gets beaten up for taking bailout money from the TARP fund back in 2009. Ford fans point out that the blue oval crew didn’t take any “bailout money,” which is almost true. When it comes to this topic, its like a duck floating on a pond. Above the water level, everything is calm, but below the water surface, the duck is paddling like hell. If we are talking about Troubled Asset Relief Program (TARP) money, then yes, Ford did not take any money from the TARP fund. Did they get bailout money from other sources in the government? Yes they did… and a lot of it.
Let’s reset the timeline history. The big three automakers appeared before congress in November of 2008, requesting $50 billion to avoid bankruptcy.
Congress put the automakers in the hotseat and refused their initial request, sending the automakers back home to refine their plans. Congress was willing to loan the companies money as long as it was tied to the development of energy efficient vehicles. GM, Ford, and Chrysler wanted another 25 billion from the TARP fund, largely to support the auto unions and jobs within the companies.
In December of 2008, the automakers came back to congress requesting $35 billion, of which congress agreed to $23.4 billion in bailout money using TARP funds.
What The Automakers Got
The breakdown of the Automotive Industry Finance Program had loans to provide operating cash to GM and Chrysler, as well as money available for the car buyers through GMAC. General Motors was awarded a $13.4 billion loan with $6 billion set aside for GMAC. Chrysler was given a $4 billion loan. These amounts were determined to be the best alternatives for the companies by congress.
Does that mean that Ford did not get any money from the governement? Hardly. Congress decided that the best alternative for Ford was to get funds from the Term Asset-Backed Securities Loan Facility (TALF), which is a government program for auto, student, and other consumer loans. These were very low-cost government loans to the tune of $5.9 billion that helped Ford tip-toe past bankruptcy and overhaul their factories to bring out more fuel-efficient technology. The Obama administration’s plans of having a million electric cars on the road by 2015 were being funneled through Ford and two other companies (Nissan and Tesla), and Ford fans had the audacity to call GM “Government Motors.”
Despite hiding behind the trees for a couple of years, the bailout finally caught up with Ford as evidenced by the Ford’s Twin Cities Assembly Plant in Minnesota which was closed in 2011. Photo from www.wikipedia.org
That was the tradeoff for Ford. They promised to fast-track development of energy-efficient vehicles and consolidate operations by making “greener” cars that the Obama administration wanted to see.
Ford Credit borrowed $15.9 billion dollars as opposed to GMAC, GM’s financing arm which borrowed $13.9 billion. These numbers make the perception that Ford was the only Detroit-based company that didn’t need a federal handout during the economic crash completely false.
For their part, GM agreed to streamline the number of brands they produce. The big three CEOs agreed to work for $1 a year and sell their corporate jets as well.
Let’s be honest here: Ford has gotten a free pass and earned market shares for being the only US automaker that “didn’t take bailout money,” when they did in fact, take government loans with the condition of making cars that the government wanted. Which company was truly “Government Motors” in the real behind the scenes scenario? That would be Ford, of course.
All of this information is public and easily researched. We don’t want you to take our word for it but we expect you to take a minute and look it up for your own edification. Then the next time a Ford owner says; “At least Ford didn’t take bailout money,” you can call BS and set the record straight.