G.M.
Possessed by Legions of Demons
Sightings from The Catbird Seat
~ o ~
June 2, 2009
Humbled GM files for bankruptcy protection
U.S.-led restructuring largest industrial bankruptcy in U.S. history
WASHINGTON - General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration’s plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.
GM’s bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.
“The General Motors board of directors authorized the filing of a Chapter 11 case with regret that this path proved necessary despite the best efforts of so many,” GM Chairman Kent Kresa said in a written statement. “Today marks a new beginning for General Motors. ... The board is confident that this New GM can operate successfully in the intensely competitive U.S. market and around the world.”
As it reorganizes, the fallen icon of American industry will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That’s on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.
Late Monday, U.S. bankruptcy court judge Robert Gerber gave interim approval for the Detroit-based automaker’s use of a total of $33.3 billion in bankruptcy financing, with $15 billion available for use over the next three weeks. He will rule on final approval of the financing on June 25. Gerber also approved GM’s sale procedures, setting a sale approval hearing for June 30.
“Our agreement with the U.S. Treasury and the governments of Canada and Ontario will create a leaner, quicker more customer and completely product-focused company, one that’s more cost competitive and has a competitive balance sheet,” CEO Fritz Henderson said at a news conference in New York. “This new GM will be built from the strongest parts of our business, including our best brands and products.”...
http://www.msnbc.msn.com/id/31030038/
June 2, 2009
GM to sell Hummer to
Chinese company
By TOM KRISHER and BREE FOWLER, AP
DETROIT – General Motors Corp. took a key step toward its downsizing on Tuesday, striking a tentative deal to sell its Hummer brand to a Chinese manufacturer, while also revealing that it has potential buyers for its Saturn and Saab brands.
GM has an agreement to sell its Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co. of China, said a person briefed on the deal.
The Detroit automaker announced Tuesday morning that it had a memorandum of understanding to sell the brand of rugged SUVs, but it didn't identify the buyer. A formal announcement of the buyer was to be made Tuesday afternoon, said the person briefed on the deal. The person spoke on condition of anonymity because the details have not been made public.
Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business.
GM said the sale will likely save more than 3,000 U.S. jobs in manufacturing, engineering and at various Hummer dealerships.
As part of the proposed transaction, Hummer will continue to contract vehicle manufacturing and business services from GM during a transitional period. For example, GM's Shreveport, La., assembly plant would continue to contract to assemble the H3 and H3T through at least 2010, GM said.
The automaker also said Tuesday that it has 16 buyers interested in purchasing its Saturn brand, while three parties are interested in the Swedish Saab brand.
Chief Financial Officer Ray Young told reporters and industry analysts on a conference call that GM is continuing to pursue manufacturing agreements with a new Saturn buyer.
GM would like to sell the money-losing Saturn brand's dealership network, contracting with the new buyer to make some of its cars while the buyer gets other vehicles from different manufacturers.
At the same time, bridge loan discussions with the Swedish government are progressing, Young said.
GM, which filed for Chapter 11 bankruptcy protection in New York on Monday, is racing to remake itself as a smaller, leaner automaker. In addition to its plan to sell the Hummer, Saab and Saturn brands, GM will also phase out its Pontiac brand, concentrating on its Chevrolet, Cadillac, Buick and GMC nameplates.
The company hopes to follow the lead of fellow U.S. automaker Chrysler LLC by transforming its most profitable assets into a new company in just 30 days and emerging from bankruptcy protection soon after.
But GM is much larger and complex than its Auburn Hills-based rival and isn't up against Chrysler's tight June 15 deadline to close its deal with Fiat Group SpA.
Sharon Lindstrom, managing director at business consulting firm Protiviti, said the companies pose different challenges. But as with Chrysler, she notes that the Treasury Department made sure many of GM's moving parts were in order ahead of time so a quick bankruptcy reorganization might be possible.
"They had a lot of their ducks in a row because the terms of the government financing forced them to get all the parties to the table in a very, very short period of time," Lindstrom said.
Separately, the German government said Tuesday it paid out the first euro300 million ($425 million) in bridge loans to GM's Adam Opel GmbH division. The loans are part of a deal to shrink GM's stake in Opel and shield it from GM's bankruptcy protection filing in the U.S.
Canadian auto supplier Magna International Inc. and Russian-owned Sberbank will acquire 55 percent of Opel.
A sale of the Hummer brand had been expected. Chief Executive Fritz Henderson had said in April that the automaker was expecting final bids from three potential buyers within the month.
Critics had seized on the rugged but fuel-inefficient Hummer as a symbol of excess as GM's financial troubles grew and gas prices rose. Sales at Hummer, which is known for models with military-vehicle roots, have been in a steep slide since gasoline prices rose to record heights last summer. For the first four months of this year, Hummer sales are down 67 percent.
GM nailed down deals with its union and a majority of its bondholders and arranged the Opel deal in order to appear in court Monday with a near-complete plan to quickly emerge with a chance to become profitable.
The government has said it expects GM to come out of bankruptcy protection within 60 to 90 days. By comparison, the judge overseeing Chrysler's case approved the sale of its assets to a group led by Italy's Fiat in just over a month. Some industry observers think Chrysler could emerge as early as this week.
During Monday's hearing, GM attorney Harvey Miller stressed the magnitude of the case and the importance of moving GM through court oversight as fast as possible. He noted that the automaker only has about $2 billion in cash left.
"If there's going to be a recovery of value, it's absolutely crucial that a sale take place as soon as possible," Miller said in his opening statement.
The automaker wants to sell the bulk of its assets to a new company in which the U.S. government will take a 60 percent ownership stake. The Canadian government would take 12.5 percent of the "New GM," with the United Auto Workers union getting 17.5 percent and unsecured bondholders receiving 10 percent. Existing shareholders are expected to be wiped out.
U.S. Judge Robert Gerber moved swiftly through more than 25 mostly procedural motions during the automaker's first-day Chapter 11 hearing.
Gerber set GM's sale hearing for June 30, putting it on a path similar to that of Chrysler. Objections are due on June 19, with any competing bids required to be submitted by June 22.
Gerber also gave GM immediate access to $15 billion in government financing to get it through the next few weeks, and interim approval for use of a total $33.3 billion in financing, with final approval slated to be ruled on June 25. The funds are contingent on GM's sale being approved by July 10. Gerber also approved motions allowing the company to pay certain prebankruptcy wages, along with supplier and shipping costs.The sheer size of GM makes it a more complicated case than Chrysler.
GM made twice as many vehicles as Chrysler's 1.5 million last year and employs 235,000 people compared with Chrysler's 54,000. GM also has plants and operations in many more countries, meaning it will likely have to strike separate deals to navigate the bankruptcy laws of those places.
Henderson said GM has learned a few things by watching Chrysler's case.
"Certainly the court showed that it can address 363 (sale) transactions in an expeditious fashion," Henderson said at a news conference Monday. "Particularly in our case with what will be a very large 363 transaction."
GM's filing for Chapter 11 bankruptcy protection is the largest ever for an industrial company. GM, which said it has $172.81 billion in debt and $82.29 billion in assets, had received about $20 billion in low-interest loans before entering bankruptcy protection.
http://news.yahoo.com/s/ap/20090602/ap_on_bi_ge/us_automakers
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For more, GO TO > > > The Sellout & Selloff of the Good Ol’ U.S. of A.!
See also:
http://www.cnn.com/ALLPOLITICS/1998/06/03/china.trade/
http://www.apfn.org/THEWINDS/archive/economy/china5-97.html
http://kucinich.house.gov/Issues/Issue/?IssueID=1466
www.state.gov/www/policy_remarks/1998/980617_roth_china.html
http://www.siliconv.com/archive/chinamfn.html
February 24, 2009
Delphi wins right to cut
retirees' benefits
NEW YORK (Reuters)—A U.S. judge on Tuesday provisionally granted bankrupt car parts maker Delphi Corp. permission to end health care and life insurance benefits for its retired salaried workers as of April.
Delphi sought relief from the benefits, which cost it more than $70 million per year, according to court documents. Those benefits amount to liabilities of more than $1.1 billion on its balance sheet.
Citing Delphi's need to conserve liquidity, U.S. Bankruptcy Judge Robert Drain of the Southern District of New York said that the company had waited for a sufficient time before seeking to suspend the benefits.
Delphi, which filed for Chapter 11 in 2005, has had complications with its exit financing over the last year and recently said former parent General Motors Corp. was in talks to buy back parts of the company.
Lawyers for about 15,000 salaried retirees had argued that parts of the U.S. Bankruptcy code limited the ability of a debtor in possession to modify retiree benefits, but Delphi countered that those benefits are provided "at will."
Judge Drain ruled that the code only applied when retirees could prove they have a guaranteed right to those benefits.
Troy, Mich.-based Delphi also sought to stop providing similar benefits to future salaried retirees and post-retirement life insurance benefits to its current and future retirees.
Judge Drain ordered the creation of a committee to see whether any group of employees may be vested in the plans and have guaranteed rights to the benefits.
He granted the committee a budget of $200,000 and set a hearing date of March 11 for it to present its results.
"The consequence of the court being wrong is pretty serious," Judge Drain said.
"No company is ever satisfied with having to cut benefits," said Jack Butler, Delphi's bankruptcy lawyer. "But we appreciate the judge concurring with our business judgment."
Delphi was one of several U.S. auto parts companies to file for bankruptcy from 2004 to 2006 and has cut thousands of jobs to cope with the declining market share of General Motors, which spun it off in 1999 and is still its biggest customer.
Delphi and other auto parts makers are under intense pressure after steep production cuts from all three U.S. automakers. In early February, Delphi warned that the value of its business would be substantially below the $6.3 billion it had estimated in October.
U.S. auto sales plunged 18% to 13.2 million vehicles in 2008. Analysts say the market is certain to fall further in 2009 after January sales plunged to a 27-year low.
The case is In re: Delphi Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 05-44481.
http://www.businessinsurance.com/cgi-bin/news.pl?post_date=2009-02-24&id=15520
* * *
Profile
Robert Drain is a United States Bankruptcy Judge for the Southern District of New York.
Judge Drain earned his B.A. degree cum laude from Yale University in 1979 and his J.D. degree in 1984 from Columbia University School of Law, where he was a Harlan Fiske Stone Scholar for three years.
At the time of his judicial appointment in 2002 he was a partner in the New York law firm of Paul, Weiss, Rifkind, Wharton and Garrison. Judge Drain has practiced bankruptcy law from the beginning of his career, first with the New York firm of Milbank, Tweed, Hadley & McCloy and then at Paul, Weiss, where, in Chapter 11 cases, restructurings and litigation, he represented debtors, trustees, creditors, creditors’ committees, and buyers of distressed businesses. He was active in transnational insolvency matters and in the area of bankruptcy acquisitions.
Judge Drain is a member of the American Bankruptcy Institute and the Association of the Bar of the City of New York, where he was a past secretary of its Committee on Bankruptcy and Corporate Reorganization, the National Conference of Bankruptcy Judges, and the International Insolvency Institute. He has lectured and written articles on numerous bankruptcy-related topics and is an adjunct professor at St. John's University Law School
* * *
Paul, Weiss, Rifkind, Wharton & Garrison LLP is a firm of more than 500 lawyers, with diverse backgrounds, personalities, ideas and interests, who collaborate with clients to help them conquer their most critical legal challenges and business goals. Our long-standing clients include many of the largest publicly and privately held corporations and financial institutions in the United States and throughout the world....
Bankruptcy & Corporate Reorganization
Paul, Weiss offers full-service bankruptcy and reorganization capabilities that clients call upon to resolve their most complex restructuring and insolvency situations....
The firm has played key roles in many of the major cases that grabbed the headlines over the past several years as businesses and investors worldwide faced rapid market and regulatory transformation....
Paul, Weiss has handled numerous representations of official or unofficial creditors’ committees in many of the largest bankruptcies and out-of-court workouts of recent years. These include the following:
GM and GMAC bondholder groups.
An unofficial noteholder committee of Charter Communications.
The ad hoc committee of bondholders of Quebecor, a multi-national printing company. Quebecor is the subject of CCAA proceedings in Montreal and chapter 11 cases in New York.
An ad hoc committee of bank counterparties holding multi-billion dollar financial guaranty claims against a monoline insurer.
The unofficial committee of second-lien debtholders in the chapter 11 case of Calpine Corporation, an electric power producer, in one of the largest and most complex bankruptcy cases in recent history.
The majority noteholder group in the chapter 11 case of The Wornick Company, a leading manufacturer of ready-to-eat shelf stable food.
The official creditors committee in the chapter 11 case of Amtrol Inc., one of the largest manufacturers of water system solutions in the world.
The unofficial committee of unsecured claimholders of Delta Air Lines Inc. in Delta’s Chapter 11 cases. The unofficial committee was comprised of 18 members who held approximately $2.35 billion of unsecured claims against Delta.
The official creditors’ committee in the chapter 11 case of Armstrong World Industries, Inc., one of the world’s largest manufacturers of building materials burdened by multi-billion dollar asbestos liability.
The official creditors’ committee in the chapter 11 case of NorthWestern Corporation, a major regional provider of electricity, gas and related services.
The unofficial committee of American Cellular noteholders in an out-of-court restructuring that resulted in a recovery for the Noteholders of approximately $0.82 per dollar for notes that were trading at $0.14 at the beginning of the matter.
The creditors’ committees of several Sprint PCS "affiliates" involving the restructuring of over $2 billion of debt.
Other significant representations include:
Citigroup and its subsidiaries in the Enron bankruptcy case and in numerous Enron-related litigations.
Bondholders holding more than $3.5 billion in debt of Equity Office Properties Trust in opposing the tender offer proposed in connection with its sale to Blackstone Group L.P.
Time Warner in its $17.6 billion acquisition, together with Comcast, of the assets of Adelphia Communications.
Foamex International Inc., the largest manufacturer of flexible polyurethane and advanced foam products in North America, in its emergence from chapter 11 under a plan of reorganization under which all creditors were paid in full and all stockholders retained their interests.
The California Public Utilities Commission (CPUC) in the chapter 11 case of Pacific Gas & Electric (PG&E), California’s largest investor-owned public utility and the largest public utility in U.S. history to file for bankruptcy.
The Penn Traffic Company, one of the leading U.S. food retailers with annual revenues of $2.3 billion, in its chapter 11 case.
We also have represented many significant stakeholders, including Marubeni Corporation, Viacom and MatlinPatterson Global Advisors LLC, in significant cases such as National Steel, U.S. Airways and NRG Energy. We are counsel to Pneumo-Abex regarding complex claims arising in the Federal Mogul bankruptcy. In addition, we represented principal parties in the chapter 11 cases of Global Crossing and WorldCom.
Clients also rely on Paul, Weiss to provide advice in connection with complex structured financings and investments. These clients include Major League Baseball, Silver Point Finance, Lehman Brothers and others. We regularly advise financial institutions, investment banks, investors and funds, including Citigroup, Morgan Stanley, Lehman Brothers, Oaktree, Oak Hill, Angelo Gordon, Silver Point Capital and Värde Partners on existing or planned investments.
The Bankruptcy Department is chaired by Alan W. Kornberg, who was named one of the 2003 Dealmakers of the Year by American Lawyer magazine for his work on the PG&E bankruptcy, and includes seven partners, three counsel and 14 associates who concentrate exclusively on bankruptcy and restructuring matters. The Department works closely with lawyers in the firm’s Corporate, Tax, Litigation, Real Estate, ERISA and Environmental Departments depending on the nature of the matter and the client’s needs. Many of these lawyers have recognized expertise in issues involving insolvent companies.
www.paulweiss.com/practice/servicedetail.aspx?firmservice=33
* * *
Milbank, Tweed, Hadley & McCloy LLP
Milbank, Tweed, Hadley & McCloy LLP (commonly known as Milbank) is a United States law firm headquartered in New York City. It also has offices in Washington, D.C., Los Angeles, London, Frankfurt, Munich, Tokyo, Hong Kong, Singapore and Beijing.
Milbank is a global law firm, with approximately 550 lawyers who provide a full range of financial and business legal services to many of the world's leading financial, industrial and commercial enterprises, as well as governments, institutions and individuals.
History
Milbank's roots are traced back to 1866, with the inception of the original firm, Anderson, Adams & Young. The first merger took place in April 1929, when the then-successor firm, Murray & Aldrich, combined with Webb, Patterson & Hadley and became Murray, Aldrich & Webb. In 1931, the Firm merged with Masten & Nichols to become Milbank, Tweed, Hope & Webb. The Firm's present name dates from 1962.
Historically, Milbank has represented some of the biggest names in business and finance. For decades, the firm's biggest clients were the Rockefeller family and the Chase Manhattan Bank. The firm also advised the Vanderbilt family, members of the Mellon and Johnson families, and Jacqueline Onassis.
The firm was responsible for all the legal work on the building of Rockefeller Center, and its offices can still be found in the One Chase Manhattan Plaza. Additionally, the firm helped create legal strategies for the developing railroads of the early 1900's, and helped clients resolve the disputes arising over commodities shortages and bank loans in the wake of World War I....
As commercial and investment banks progressively drove the financing of American business, Milbank created hedge funds and other investment vehicles for financial clients in the 1960s, 1970s and 1980s and capitalized on the growth of international business, finance, and technology transactions in the 1990s....
Misconduct
In 1997, Milbank was forced to disgorge $1.9 million in fees in a Wisconsin bankruptcy due to the failure to disclose a conflict of interest. One partner, John Gellene, was sentenced to 15 months in prison for the crime. The incident became the subject of the book Eat What you Kill: The Fall of a Wall Street Lawyer....
http://en.wikipedia.org/wiki/Milbank,_Tweed,_Hadley_&_McCloy
* * *
Skadden
John (Jack) Wm Butler, Jr.
Partner
Corporate Restructuring
Jack Butler is co-leader of Skadden’s worldwide corporate restructuring practice, which serves corporations and their principal creditors and investors by providing value-added legal solutions in troubled company M&A, financing and restructuring situations. He has acted as lead counsel for sellers, purchasers and creditors in hundreds of transactions across the Americas as well as cross-border transactions in Asia, Australia, Europe and the Middle East. Mr. Butler also advises officers and directors of public companies involved in debt restructuring on matters related to corporate governance and fiduciary duty.
Mr. Butler’s representative company matters include the restructuring of Delphi Corporation, Friedman’s Inc., Haynes International, Inc., Kmart Corporation, Per-Se Technologies, Inc. (formerly Medaphis Corporation), Rite Aid Corporation, Singer N.V., Venator Group, Inc., Wickes Furniture Co., Inc. and Xerox Corporation, and special counsel representations of 360/networks, inc., Enron Corporation and The Warnaco Group, Inc. He also represented US Airways Group, Inc. in its 2002 restructuring, which provided the company with $1.24 billion in liquidity. Mr. Butler has substantial experience in representing companies in transactions that provided for the disposition of their assets and operating businesses to third parties as part of Chapter 11 cases, including: Air Transport International LLC, Comdisco, Inc., Eagle Food Centers, Inc., FPA Medical Management, Inc., Peter J. Schmitt Co., Inc., Service Merchandise Company, Inc. and USN Communications, Inc....
Representative creditor matters include advice to Bankers Trust Company, as agent for the senior lenders in the reorganization cases of Bradlees, Inc. and The Grand Union Company; Credit Suisse First Boston, in connection with the restructuring and sale of Long John Silver’s restaurants; and Verizon Capital Corporation and its special purpose affiliates in the reorganization cases of PG&E National Energy Group, Inc. and USGen New England, Inc....
http://www.skadden.com/index.cfm?contentID=45&bioID=695
December 30, 2008
GMAC Adds Loans as U.S. Injects $6 Billion to Aid GM
By Rebecca Christie and David Mildenberg
Dec. 30 (Bloomberg) -- GMAC LLC*, bolstered by a $6 billion federal bailout, resumed lending to General Motors Corp. customers with lower credit scores as the U.S. stepped up efforts to keep the automaker in business.
The Treasury said yesterday it will take a $5 billion stake in Detroit-based GMAC, the financing arm of GM, and lend $1 billion to the automaker that will be invested in GMAC to boost its capital. Within hours, GM was offering five-year, no- interest loans to halt this year’s 22 percent slide in sales, which dealers have blamed on a lack of financing for customers.
(Catbird comment: Whatever happened to our “unfair competition” and “fair trade” and “free trade” principles, laws, and agreements? And, when did we become a socialist nation?)
Reviving GM’s sales has become a priority for U.S. policy makers including the Federal Reserve because of concern that the automaker and its suppliers might go bankrupt and deepen the year-old recession by firing millions of workers. The funds for GMAC are on top of $13.4 billion the Treasury agreed earlier this month to lend to GM and Chrysler LLC.
“The economy has stopped on a dime, and the Fed is looking anywhere there are large markets they can affect in big ways,” said Greg Prost, chief investment officer at Ambassador Capital Management in Detroit, which manages about $800 million. “If they are going to save the car companies, there is going to have to be financing.”
GMAC will now lend to vehicle buyers with credit scores of 621 or higher, compared with a previous standard of at least 700, according to a company statement. The higher threshold had excluded about 42 percent of U.S. consumers.
Helping GM
The company said it won’t finance “higher-risk transactions,” instead concentrating on prime customers who are more likely to repay using “responsible credit standards.” The relaxed policy “will allow us to return to more normal levels of financing volume, and should help in efforts to stabilize the U.S. auto industry,” GMAC President Bill Muir said in today’s statement.
The lender financed about 35 percent of GM’s retail customers and about three-quarters of dealer inventory last year. GM, which sold 51 percent of GMAC in 2006 to a group led by private equity firm Cerberus Capital Management LP, is seeking a permanent federal bailout to avert bankruptcy. Cerberus also owns Chrysler.
Markets React
GMAC ran short of cash this year after $7.9 billion of losses over five quarters, mostly from record defaults on subprime mortgages, which are made to homebuyers with the worst records. The lender was shut out of credit markets and had to limit lending only to people with the top repayment histories, a policy that GM dealers said had cut deeply into sales....
GMAC’s 8 percent bonds due in 2031 jumped 6.75 cents to 54.75 cents on the dollar to yield 15.1 percent at 1:09 p.m. in New York, according to Trace, the Financial Industry Regulatory Authority’s debt-pricing service. The bonds, which traded at a low of 25 cents on Nov. 24, have jumped 21.75 cents since the Fed on Dec. 24 said it had approved GMAC’s bank holding company application. GM’s stock rose 5.6 percent in New York Stock Exchange composite trading.
Rescue Program
GM’s $1 billion loan from the Treasury would be used to support a GMAC rights offering, which is designed to help the lender bolster its balance sheet. The loan may be completed by about Jan. 16, the Treasury said.
The agreement opens a new rescue program for the car industry as part of the Treasury’s $700 billion Troubled Asset Relief Program. The bailout, originally designed to buy soured loans and securities from banks, has since become a tool for Treasury to prop up lenders, insurers, carmakers and now auto-finance companies.
The investment in GMAC is “part of a broader program to assist the domestic automotive industry in becoming financially viable,” the Treasury said in a statement yesterday.
GMAC will pay an 8 percent dividend on the Treasury’s $5 billion of senior preferred equity. The company will also issue warrants in the form of additional preferred equity that will equal 5 percent of the preferred-stock purchase and pay a 9 percent dividend if exercised.
No Deadline
The Bush administration has already agreed to loan GM $4 billion this month and $5.4 billion next month. If Congress agrees to approve funding of a second $350 billion for TARP, GM may get another $4 billion in February.
A Treasury official said there is no cap or deadline for aid for the auto industry under TARP. Congress “will need to release” the second half of the $700 billion under the Treasury’s rescue plan, the official said on condition of anonymity during a conference call with reporters....
With GM selling cars at the slowest pace in 26 years and the country in its worst housing crisis since the Great Depression, GMAC and its Residential Capital LLC mortgage unit have had no way to revive their own revenue. ResCap has faced speculation about bankruptcy after $9.1 billion of losses in two years.
“The relationship with GM is probably a key reason it’s being bailed out,” said Thomas Atteberry, who helps manage $3.5 billion in fixed-income assets at First Pacific Advisors in Los Angeles. “I’m not very happy about the fact that the government has to save an auto-finance company because management ran it into the ground.”
GMAC shook up management in April, naming Al de Molina, a former finance chief at Bank of America Corp. , as chief executive officer of GMAC Financial Services. Thomas Marano, who led mortgage trading and originations at Bear Stearns Cos., was named non-executive chairman of the Residential Capital mortgage unit and later promoted to CEO.
New Managers
“GMAC’s new management team has a strong background in banking,” said GMAC’s Proia. “They have had the vision and been able to execute these initiatives that will position the company for longer-term health.”
Management of Cerberus includes former Treasury Secretary John Snow, who is chairman of the New York-based private-equity firm. That poses a potential conflict of interest in a Treasury Department rescue of GMAC, said Josh Lerner, a Harvard Business School investment banking professor. It’s countered by the need to help GM, Lerner said.
“You can criticize the whole bailout process for a lack of transparency and this is no exception,” Lerner said. “On the other hand, it’s widely accepted that saving GM is an important public policy goal, at least in the short run.”
Cerberus spokesman Jim Olecki didn’t immediately return calls for comment.
To contact the reporters on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net; David Mildenberg in Charlotte at dmildenberg@bloomberg.net
*Note: GMAC LLC is a PRIVATE COMPANY - not a public corporation.
December 25, 2008
J. Ezra Merkin Ordered Not
To Destroy Records
by Darren
J. Ezra Merkin has been ordered to not destroy any financial records related to the dealings of Bernard J. Madoff. Merkin is the chairman of GMAC who runs several hedge funds which invested with Madoff. The dealings came to light when one of Merkin’s clients, New York University, learned that Merkin had lost $24 million of their capital.
The suit claims that Merkin and his hedge fund, Ariel Fund Ltd. and its’ management group Gabriel Capital Corporation, failed on their responsibility of cash management by turning the money over to Madoff for investment. The Ariel Fund Ltd has already announced plans to liquidate their holdings in light of the recent scandal. The suit also mentions Fortis, who partnered with Merkin in the creation of Ariel Fund Ltd. All told, NYU had invested a staggering $94 million into the fund.
As the losses come in from the Madoff scam, the elite of New York City Jewish philanthropy are among the victims, as well as helping to perpetrate the fraud. Merkin is the grandson of Hermann Merkin who was known as a titan of Jewish philanthropy. He donated gave millions to help build Yeshiva University, and the Fifth Avenue Synagogue.
Human loss mounts in Madoff Ponzi Scheme
The human expense of the Madoff scheme is mounting. Charitable foundations and lives have been destroyed. Merkin clearly used his influential position and the capital of Yeshiva University to invest $1.8 billion into Bernard Madoff’s firm.
That was little consolation, however, to Yeshiva University, said to have lost $110 million of its endowment; or to Congregation Kehilath Jeshurun, the Ramaz School of Manhattan and SAR Academy in Riverdale, said to have lost substantial sums; or to several family foundations belonging to Merkin’s fellow trustees at Yeshiva University, including Robert M. Beren and Ludwig Bravmann.
Another Ascot casualty was a charitable trust founded by real-estate magnate Mortimer Zuckerman, the chairman of real-estate firm Boston Properties and owner of the New York Daily News and U.S. News & World Report. That lost $30 million.
NYU said Merkin blindly turned the money over to Madoff.
“Without making disclosures in the quarterly reports to investors, and in the face of an extraordinary number of ‘red flags,’ Merkin, for years, simply turned over a substantial portion of Ariel’s funds to Madoff,” said NYU in their complaint.
Merkin has so far denied wrongdoing, laying the blame squarely on Madoff.
“Mr. Merkin remains committed to obtaining for shareholders the best results possible in the wake of the terrible fraud committed by Bernard Madoff,” Andrew Levander, attorney for J. Ezra Merkin said.
Madoff has caused huge damage to the work of Jewish philanthropic organizations
It’s safe to say the the amount of damage to Jewish philanthropic organizations is significant....
See also:
http://www.kycbs.net/No-Bailout-for-Billionaires.htm
http://www.youtube.com/watch?v=U_yA8J-oGQk
http://www.kycbs.net/Jews-Control-America.mht
http://www.voy.com/129276/1273.html
October 9, 2008
GM shares drop to 58-year low, global risks eyed
By David Bailey
General Motors Corp shares fell to their lowest level since 1950 on Thursday as concerns mounted that an industry decline that started in the United States was spreading and a leading forecaster warned global auto demand could "collapse" in 2009.
GM shares fell as much as 33 percent to $4.65, driving its market capitalization to its lowest level since 1929, according to California-based Global Financial Data. The stock closed down 31.11 percent at $4.76 on the New York Stock Exchange.
Shares of Ford Motor Co hit a 26-year low, shedding as much as 24 percent. The stock closed down 21.8 percent at $2.08. Shares of major auto parts makers also declined.
At its low, GM's market capitalization stood at $2.6 billion, compared with a market capitalization of about $4 billion in March 1929 before the stock market crash that preceded the Great Depression....
U.S. auto sales have fallen nearly 13 percent through the first nine months of 2008 and forecasters expect the worst year for sales since the early 1990s, and further declines in 2009 as the industry buckles under weak consumer demand....
Analysts say that other automakers in the U.S. market, led by Toyota Motor Corp, have deeper pockets to withstand the sales downturn.
Toyota made an unprecedented interest-free loan offer on 11 vehicle models after posting a 32 percent drop in sales in September. The program may be extended, North American sales chief Jim Lentz told Reuters on Thursday....
GM has announced plans to try to increase liquidity by $15 billion through cost cuts, asset sales and new borrowing....
GM, the largest U.S.-based automaker, posted a $15.5 billion net loss in the second quarter and plans to increase production of more fuel-efficient cars in North America to adjust to dropping demand for pickups and SUVs....
More recently, there have been signs of slowing in mature European markets and more moderate growth expectations for emerging markets where automakers had aimed resources....
http://news.yahoo.com/s/nm/20081009/ts_nm/us_autos_outlook
June 26, 2008
U.S. stocks sink;
GM shares sink nearly 11%
Brokers no longer 'attractive,' says Goldman Sachs;
oil tops $140 a barrel
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell sharply Thursday with the blue-chip index enduring its worst June so far since 1930, and plunging to its lowest finish since Sept. 11, 2006, after getting slammed hard as crude soared to new highs and Goldman Sachs disparaged U.S. brokers and advised selling General Motors Corp.
"We're going to move in the opposite direction of oil, and General Motors is going to go out of business, at least according to Goldman Sachs," said Art Hogan, chief market strategist at Jefferies & Co.
The Dow Jones Industrial Average Dow Jones Industrial Average tumbled 358.41 points, or 3%, to 11,453.42, leaving it down nearly 1,200 points, or 9.4%, for the month, with one trading day yet to go. As things stand, the month is the worst June so far since 1930 when the index declined 17.72%.
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May 11, 2008
GOP Leader Quits Over
Myanmar Junta Ties
ST. PAUL, Minn. - (AP) - The man picked by the John McCain campaign to run the 2008 Republican National Convention resigned Saturday after a report that his lobbying firm used to represent the military regime in Myanmar.
Doug Goodyear resigned as convention coordinator and issued a two-sentence statement:
"Today I offered the convention my resignation so as not to become a distraction in this campaign. I continue to strongly support John McCain for president, and wish him the best of luck in this campaign."
Goodyear, chief executive of lobbying firm DCI Group, resigned a few hours after Newsweek posted a story online that the company was paid $348,000 in 2002 and 2003 to represent Myanmar's junta.
"We respect Mr. Goodyear's decision, and look forward to the convention in September," said Brian Rogers, a spokesman for the McCain campaign.
Cyclone Nargis left more than 60,000 people dead or missing, and the U.N. estimates that at least 1.5 million people have been severely affected. Human rights organizations and dissident groups have bitterly accused the junta of neglecting disaster victims and blocking foreign donations of relief supplies.
Justice Department records covering agents of foreign agents that are required to register with the U.S. government show DCI signed a contract to work to "improve relations between the United States and Myanmar" and to act as the junta's public relations agent in Washington.
Newsweek said the firm drafted news releases praising Burma's efforts to curb the drug trade and denouncing claims by the Bush administration that the regime engaged in rape and other abuses.
"It was our only foreign representation, it was for a short tenure, and it was six years ago," Newsweek quoted Goodyear as saying. The magazine said Goodyear added that the junta's record in the current cyclone crisis is "reprehensible."
The Newsweek article also reported that some of Goodyear's allies worried the choice of Goodyear could fuel perceptions that McCain is surrounded by lobbyists. DCI Group earned $3 million last year lobbying for ExxonMobil, General Motors and other clients, the report said.
Newsweek also reported DCI has been a pioneer in running "independent" expenditure campaigns by so-called 527 groups, the kind of operations that McCain has denounced in his battle for campaign finance reform.
The convention runs Sept. 1-4 at the Xcel Energy Center in downtown St. Paul.
www.cbsnews.com/stories/2008/05/11/politics/main4086222.shtml
November 7, 2007
General Motors records $39 billion loss on tax hit
By Shawn Langlois, MarketWatch
SAN FRANCISCO (MarketWatch) -- General Motors Corp. on Wednesday said its third-quarter loss ballooned to $39 billion on a massive accounting charge, with the news rattling investors as an unwelcome stall along the automaker's road to recovery.
The stock dropped more than 6% to close at $33.95.
On a per-share basis, GM posted a record loss of $68.85. That compares to a year-ago loss of $147 million, or 26 cents a share.
The staggering figure casts a shadow on what had been a streak of positive developments for GM, including three straight quarters of profitability.
The Detroit giant also regained its lead as the world's biggest car maker from Toyota Motor Corp. ) thanks to a string of monthly sales improvements. And, perhaps most importantly, GM reached a landmark labor deal with the United Auto Workers that will keep the company from drowning in long-term retiree health-care costs.
Now, however, it seems as if the state of GM's business is "bad and getting worse" and the big charge signals more than just a "non-cash, non-recurring" item, according to Bear Stearns analyst Peter Nesvold....
A day earlier, GM explained that most of the red ink -- $38.6 billion, to be precise - relates to the loss of deferred tax assets in the U.S., Canada and Germany. To qualify for deferred tax assets, a company must be reasonably confident it will have taxable income.
GM said that confidence has been shaken by sluggish earnings growth in its core North American automotive market and setbacks at GMAC Financial Services, its lending business.
Besides that charge, GM also took a $3.5 billion gain on the sale of Allison Transmission and took $1.6 billion in pension service costs, $400 million for restructuring actions and $400 million related to a reserve adjustment for supplier and former unit Delphi Corp....
GM said there was a "significant" decline in net income at GMAC and increased corporate expenses. GMAC, of which General Motors holds 49%, lost $1.6 billion. It was caught up in the subprime turmoil that has rocked mortgage and credit markets....
Overall revenue fell to $43.83 billion from $48.89 billion after the sale of most of GMAC.
September 26, 2007
G.M. and Union Reach
Tentative Agreement
By MICHELINE MAYNARD and NICK BUNKLEY
DETROIT, Sept. 26 — The United Automobile Workers union and General Motors reached a landmark agreement early today, ending a two-day strike. The key provision of the new contract is a health care trust that would get G.M.’s massive liability off its books....
G.M. said the tentative agreement was reached at 3:05 a.m. Eastern. The U.A.W. recessed the strike and said if the contract was not ratified, workers could return to picket lines. The agreement included a memorandum of understanding to establish an independent health care trust, as well as other changes to the national agreement.
G.M. said implementation of the trust would be subject to court approval, as well as a review by G.M.’s accounting for the trust by the Securities and Exchange Commission....
“There’s no question this was one of the most complex and difficult bargaining sessions in the history of the G.M./U.A.W. relationship,” Rick Wagoner, G.M.’s chief executive, said in a statement.
U.A.W. leaders are likely to meet on Friday to consider the contract. If approved, it would go to workers for a vote.
The union’s president, Ron Gettelfinger, said the new contract “will absolutely protect their jobs and keep jobs from being reduced.” He said, while not offering specifics, that the number of jobs at G.M. would be “pretty much the same if not higher” when the contract concludes in 2011.
Later, Mr. Gettelfinger confirmed in a radio interview that there was a signing bonus for workers, but declined to state its size. He also declined comment on reports that the contract contained a two-tier wage program, with sharply lower rates for any new workers hired by G.M....
The union had not staged a national strike since 1970; its last major walkout, at two plants in Flint, Mich., was in 1998....
G.M.’s key demand was the trust, called a voluntary employee benefit association, or VEBA. The VEBA, which would include the union’s participation, would be the first among the Detroit companies to take full responsibility for coverage for active and retired workers and their families. G.M. estimates that liability at $55 billion.
Similar trusts could soon follow at the Ford Motor Company and Chrysler LLC. They have pushed hard in contract negotiations for the union to agree to form such trusts, maintaining that their so-called legacy costs hinder their ability to compete with Japanese auto companies, whose costs are lower.
All told, the three companies have health care liabilities totaling nearly $100 billion.
Specifics of the funding for the trust were not available, but Mr. Gettelfinger said it would “secure the benefits of our retirees” and every G.M. hourly worker now at the company. He said the fund, which would last for 80 years, “would be solvent” throughout that time.
A primary concern for U.A.W. leaders, who have seen such funds at other companies run dry, forcing the union to grab concessions so that they could be replenished. Mr. Gettelfinger hinted that if this fund runs low, G.M. would make new investments in it. Asked if there was a “backstop” for it, Mr. Gettelfinger said, “I’m not going into details, but I like that word.”
The U.A.W., in turn, was pushing for job security for the workers who remain at G.M. after it completes a restructuring plan. G.M. plans to cut 30,000 jobs and close all or part of a dozen plants by next year....
“This agreement helps us close the fundamental competitive gaps that exist in our business,” Mr. Wagoner said.
“The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the United States along with significant future investments.”
Once the voting ends, the union will move on to the other car companies, where it traditionally tries to get similar agreements....
Although union leaders agreed to the trust, which Mr. Gettelfinger said was in workers’ best interest, the U.A.W. could face an uphill fight in winning workers’ support for the new contract.
Even before the tentative settlement was reached today, some dissidents have challenged the idea as a further deterioration of benefits that the union has enjoyed for generations.
Under it the trust, G.M. will invest cash and stock in a fund, which would have independent administers. But the union would supervise benefits for workers, families and retirees. It has agreed to smaller such trusts at G.M. and Ford, and has similar deals at Caterpillar as well as Dana Corporation, which is operating in bankruptcy.
VEBAs, which reduce a company’s debt, are an increasingly common choice by unions at troubled companies such as Bethlehem Steel and Goodyear Tire and Rubber, which established a trust with the United Steelworkers union last year.
Mr. Gettelfinger said the U.A.W. worked closely with G.M.’s chief financial officer, Frederick Henderson, to be sure that the VEBA plan would be "secure." The union also received advice from Lazard Limited as well as actuaries who specialize in such plans....
http://www.nytimes.com/2007/09/26/business/26cnd-auto.html
November 22, 2005
GENERAL MOTORS ANNOUNCES
30,000 JOB CUTS
General Motors has announced that it will cut 30,000 jobs by 2008 and stop production at nine assembly, powertrain and stamping plants.
Now, its workers are coming to grips with the idea that they may lose their jobs, and questions remain about how much the cuts will help the struggling automaker going forward. Jerome Vaughn of Detroit Public Radio reports.
http://www.npr.org/templates/story/story.php?storyId=5022706
October 10, 2005
Delphi Bankruptcy May Cost GM $11 Billion
The Delphi Corp. bankruptcy is also a potential $11 billion liability for financially troubled General Motors Corp. GM, which spun off the parts supplier in 1999, could be responsible for pensions and benefits due workers at Delphi.
GM insists its obligations to Delphi workers are unclear. But the potential of $11 billion would wipe out all of GMs profits for the last five years. GM said that it is also possible that the company may owe nothing to Delphi's union work force, setting the stage for a showdown on the issue in U.S. Bankruptcy Court.
Thousands of Delphi union workers were employed by GM before it spun off Delphi. There are presently 24,000 UAW workers and 12,000 union retirees at Delphi....
Delphi's hourly pension, health care and other retiree costs were underfunded by $10.4 billion at the end of 2004. With its union contracts, Delphi pays for the health care costs of 109,400 active hourly workers, retirees and their families.
GM estimates Delphi owes it about $1.2 billion. That will most likely be money down the drain now that Delphi doesn't have to pay all its bills. Delphi employs 185,000 people worldwide....
Delphi, the nation's largest auto parts supplier, builds everything from car batteries and brakes to stereo systems and XM Satellite radio systems. The company is certain to attempt to renegotiate both its union contracts and its deals with its customers such as GM. Last year, GM accounted for $15.4 billion, or 54%, of Delphi's total sales of $28.6 billion.
http://www.consumeraffairs.com/news04/2005/gm_delphi.html
April 19, 2005
General Motors Getting
Eaten Alive by a Free Lunch
By Allan Sloan, Washington Post
A free lunch can be the most expensive meal in the world. For living proof, look at General Motors. A big reason that GM has gotten into such trouble is that the pension and health care commitments it made to employees decades ago seemed to be a free lunch.
The United Autoworkers placed a high value on these benefits, but the accounting rules of the time placed no cost on GM's risk of providing them. So the UAW and GM made deals that were heavy on benefits, relatively light on wages.
Lower salaries meant that GM reported higher profits, which translated into higher stock prices -- and higher bonuses for executives. Commitments for pensions and "other post-employment benefits" -- known as OPEB in the accounting biz -- had little initial impact on GM's profit statement and didn't count as obligations on its balance sheet. So why not keep employees happy with generous benefits? It was a free lunch. Besides, GM's only major competitors at the time, Ford and Chrysler, were making similar deals.
Now, as we all can see, pension and health care obligations are eating GM alive. The bill for the "free" lunch has come in -- and GM is having trouble paying the tab. In the past two years, GM has put almost $30 billion into its pension funds and a trust to cover its OPEB obligations. Yet these accounts are still a combined $54 billion underwater.
"Any market economist would tell you that things that are 'free' are overconsumed," says Greg Taxin, chief executive of Glass, Lewis & Co. "That's true of pensions, it's true of OPEB, and it's true of stock options in the '90s." That's a lesson the SEC seems to have ignored, given last week's decision to let companies delay counting the value of options as an expense....
GM began its slide down the slippery slope in 1950, when it began picking up costs for medical insurance, pensions and retiree benefits. There was huge risk to GM in taking on these obligations -- but that didn't show up as a cost or balance-sheet liability. By 1973, the UAW says, GM was paying the entire health insurance bill for its employees, survivors and retirees, and had agreed to "30 and out" early retirement that granted workers full pensions after 30 years on the job, regardless of age.
These problems began to surface about 15 years ago because regulators changed the accounting rules. In 1992, GM says, it took a $20 billion non-cash charge to recognize pension obligations. Evolving rules then put OPEB on the balance sheet. Now, these obligations -- call it a combined $170 billion for U.S. operations -- are fully visible. And out-of-pocket costs for health care are eating GM alive.
GM spokesman Jerry Dubrowski says the company expects to pay $5.6 billion in health care costs this year for 1.1 million people covered by its plans. That's up from the $3.9 billion it shelled out in 2001 to cover 1.2 million people.
"At the time GM began offering these benefits, no one had any idea that the costs for prescription drugs and medical services would explode the way they have," Dubrowski said. True. But the UAW was astute (or lucky) enough to push the risk of covering these costs onto GM.
GM's pension funds are in pretty good shape, thanks to an $18.5 billion infusion two years ago. GM got this cash by selling bonds at relatively low rates, hoping to resolve its pension problems once and for all. This maneuver has been successful so far, but funding the pension plans has consumed much of GM's borrowing power and strained its balance sheet.
At the end of last year, GM says, its U.S. pension funds showed a $3 billion surplus. GM's pension accounting, which assumes that the funds will earn an average of 9 percent a year on their assets, is highly optimistic. But things are under control -- as long as GM stays solvent.
By contrast, OPEB is out of control. At year-end, OPEB was $57 billion in the hole, even though GM threw $9 billion into an OPEB trust in 2004. The company has no legal obligation to pre-fund these costs, but it's trying to show the financial markets and its workers that it's dealing with them. The OPEB trust has a hefty $20 billion of assets -- but GM calculates its obligations at a staggering $77 billion.
What's more, GM says they're rising at 10.5 percent a year. Thus, even though President Bush's Medicare prescription drug benefit whacked $4 billion off GM's OPEB obligation last year -- thanks, George -- it covered barely half the year's increase in the liability.
If GM were making lots of money selling vehicles, this would all be manageable, sort of. GM could buy enough time for demographics to bail it out, as more retirees begin getting Social Security and Medicare, reducing GM's costs, and other retirees die off. Its ratio of retirees to workers, currently 2.5 to 1, would shrink. Alas, GM's vehicle business is in the tank. Unless GM starts making money on vehicles or gets a break from the UAW or the federal government, things are going to get really ugly. I hope that doesn't happen, but it easily could.
The bottom line: Whenever you offer someone a free lunch, make sure that you'll be able to pay the bill when it comes in.
Sloan is Newsweek's Wall Street editor. His e-mail address is sloan@panix.com.
www.washingtonpost.com/wp-dyn/articles/A64599-2005Apr18.html
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From American Dynasty: Aristocracy, Fortune, and the Politics of Deceit in the House of Bush, by Kevin Phillips:
ARMAMENTS AND MEN
World War I and the Bush Family
The War Industries Board of 19-17, run by South Carolinian Bernard Baruch, brought to wartime Washington a considerable crop of border state and midwestern Democrats, among them Samuel Bush, the president of Ohio-based Buckeye Steel Castings. His background in steel and rail-roading did not make him a natural choice to head the board’s small-arms, ammuninution, and ordnance section, which procured rifles, pistols, machine guns, ammunition, and aartillery. However, he knew forgings and castings, railroads and Rockefellers, and he had been involved in government relations at the National Association of Manufacturers and the U.S. Chamber of Commerce before 1917....
World War II and the Painful Emergence of a U.S. National Security Complex
War is among the most underestimated of political forces. It has been a powerful factor in the rise of the English-speaking nations to world hegemony, and the great armed conflicts within the United States have had deep political consequences....
The American Revolution, for example, rearranged the lists of greatest wealth to begin with wartime financiers (like Robert Morris and William Duct), merchants and commissaries who supplied the U.S. and French forces, and shipowners (Elias Derby and William Bingham) whose privateers took many British vessels as prizes.
The U.S. Civil War economy of 1861-65 was also a realigning force, creating hundreds of nouveau riche war profiteers and elevating a remarkable generation of young Yankee businessmen who avoided military service and took rapid wartime steps up the economic ladder: John D. Rockefeller, Andrew Carnegie, J. Pierpont Morgan, Jay Gould, Collis Huntington, Philip Armour, Jaye Cooke, Marshall Field, and others....
From an economic standpoint, 1939-41 was not the gold mine for U.S. manufacturers and financiers that war production for Britain, France, and Russia had been in 1915-17. Besides prohibiting most U.S. exports to any belligerents, the Neutrality of 1936, 1936, and 1937 had also blocked U.S. private lending to them.
The Nye hearings had left Congress concerned about how investment bankers and armaments makers seemed to encourage wars. The rapid military collapse of France in June 1940, in just two months of fighting following the eleven-month “Phony War,” ended French demand for war materiel and also stirred widespread doubt about whether Britain by herself could stand off Hitler.
All of these circumstances permitted many corporations to hold to “America First” thinking, elaborated in some cases by pro-German economic commitments. In the 1920, Germany had been by far the most important international market for recycling the new private U.S. capital created by the war. Most of this U.S. investment, which approached $2 billion, took the form of loans to German industry, direct investment in German companies, loans to German municipalities, and endless dollars of Dawes Plan credit.
Christopher Simpson, in The Splendid Blond Beast, listed the principal U.S. firms that bought or began establishing major German subsidiaries or joint ventures during the 1920s: ITT, General Motors, Ford, Standard Oil of New Jersey, and General Electric. All were among America’s dozen largest companies...
It was in this context of political and military uncertainty that the Roosevelt Justice Department, acting under the Alien Property Act, was obliged to move against German-Connected corporations, including the half dozen noted in Chapter 1 that counted Averell Harriman, George H. Walker, or Prescott Bush as officers or directors.
Aware of press reports and government concern about his corporate ties to Germany, Bush had elevated his patriotic profile in February 1942 by becoming chairman of the United States Organization (USO) annual fund drive, which raised $33 million that year to entertain soldiers and sailors....
During that embattled spring and summer of 1942, Franklin D. Roosevelt was hardly well position to pick a fight with important elites of the same U.S. business community he needed to mobilize for a war – one that some disgruntled industrial leaders believed the president had courted.
Grousing was especially widespread in the strategic oil and chemical industries, in which a number of important companies either had cartel and patent-sharing relationsips with German firms like I.G. Farben or has set up sidiaries in Germany. Two other much-affected industries were automobiles (General Motors and Ford) and electrical equipment (General Electric and ITT). For the government to single out Farish’s flagrant withholding of process for making artificial rubber was one thing; to tangle with the Rockefellers, the du Ponts, and half of America’s largest corporations was something else...
“Merchants of Engines of Destruction”
Back in 1934, the lurid title of a book called Merchants of Death, which blamed munitions makers for the First World War, quickly became a popular phrase. FDR himself soon coined the very similar term “merchants of engines of destruction” in the same year. It was his hedged, more precise way of explaining – as he did several time in related discussions – how “the grave menace to the peace of the world is due in no small measure to the uncontrolled activities of the manufacturers and merchants of engines of destruction.”....
George H. W. Bush’s introduction to the great American gun culture probably came in the 1932s, when he and his brothers visited their grandfather Walker’s South Carolina hunting preserve. As chapter 6 noted, some accounts have tied George H. W. to support work in the CIA’s 1961 Bay of Pigs invasion, and in the years to come his record of clandestine arms deals and shipments as CIA director and then, vice president would involve countries from Cuba and Nicaragua to Iran, Iraq, Israel, Pakistan, and Afghanistan. If any vice president in U.S. history could fairly be known as “the secret-arm-deal vice president,” he would be the one.
As president, Bush senior gloried in the Gulf War and the 1989 invasion of Panama, both cast as strikes for democracy – even it the dictators attacked were former friends. Over a decade ... his web of covert international relationships prompted charges of his participating in and covering up in three actual or alleged illegalities: the Republican Party’s “October Surprise” negotiations with Iran in 1980, supposedly undertaken to ensure that no hostages taken in Iran would be released before the election; the Iran-Contra scandal; and “Iraqgate,” secretly arming Iraq from 1984 to 1990 before hurriedly changing course after Saddam Hussein took Kuwait.
Two catchphrases recur in the family resume: “arms deals” and “clandestine operations.” A third recurring association would be “cover-up.”...
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