For the last time, Ford did NOT get bailed out

"MontegoMan562 is a Capri RS Owner" (montegoman562)
03/28/2014 at 11:50 • Filed to: FORD, GM, BAILOUT

Ok. The 1st Gear on the Morning Shift today talked about Ford, GM, Chrylser and bailout money again.

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As usual a FP Troll has to say "FORD TOOK MONEY TOO". Stop it. Just stop. They took a loan. They payed their loan back (or are currently paying, irrelevant either way.

(random sweet Mustang in front of Ford World Headquarters for you! Thanks Google Image Search)

Let's look into this a little bit.

Bailout = government gave you money to save your ass, you are not responsible for paying them back, no payments, interest rates, or terms involved.

Loan = whether it's a government loan or a private banking loan. A loan will have terms, interest rates, and payments to make sure the issuer is returned their money (plus interest).

At the end of this giant thing called the Auto Bailouts that had the CEO's of 3 of the US's biggest companies in front of congress the US government lost over 10 billion dollars. Yeah, I said billion with a "B". That's tax payers money.

In the particular situation of GM, the government in exchange for giving them a crap load of money took shares. This is kind of more of a "buyout" than a "bailout" because the US Government got something for it. They even got to influence company leadership (probably for the better but irrelevant to this discussion). When they felt the company was more stable the government sold off their shares to make some money back. The problem is they lost 10 billion when they sold them.

None of this happens with Ford because they took a LOAN, with fixed terms and repayments.

Here's some reference links for how the government lost money on GM and Chrysler:

http://www.nbcnews.com/business/autos…

http://www.forbes.com/sites/joannmul…

I left off the 3rd one I used on the front page because it was so out-dated.

Am I missing something here? Why is this still up for debate after all this time? People have told me (and not just today) that Loan vs Bailout is just semantics, but I'm sorry they are different things!

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UPDATE

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BigBlock440 has given me some nice reference to show that Chrysler paid back what it took as you can see here:

Uh, so you're saying Chrysler didn't have to repay?

http://money.cnn.com/2011/05/24/aut…

http://www.nytimes.com/2011/05/25/bus…

Seems like a loan

DISCUSSION (30)

HammerheadFistpunch > MontegoMan562 is a Capri RS Owner
03/28/2014 at 11:57

"Bailout = government gave you money to save your ass, you are not responsible for paying them back, no payments, interest rates, or terms involved."

Bailouts do not work that way

There are plenty of terms, and the government absolutely wanted its money back. its just that GM stock never got to the point it needed to to make it happen.

Also, Ford's loan money CAME from the bailout stimulus package

Brewman15 > MontegoMan562 is a Capri RS Owner
03/28/2014 at 11:58

You're missing the fact that irrational hatred towards Ford/GM/Chrysler and being a fanboy far outweighs logic and facts.

JR1 > MontegoMan562 is a Capri RS Owner
03/28/2014 at 12:01

Just a bunch of Chevy/Mopar fanboys that hate Ford and want to make it sound like Ford is just as bad. Good write up, I didn't even think Ford took a loan!

MontegoMan562 is a Capri RS Owner > HammerheadFistpunch
03/28/2014 at 12:01

First, love the clip.

Second, sure there's more involved, but for the average joe on the FP my explanation is fine. and if the government lost it's ass (like completely and never got any of that 40 billion back) GM would not have been held responsible.

If Ford stopped paying on it's loans - it would have been.

Milky > MontegoMan562 is a Capri RS Owner
03/28/2014 at 12:02

IMO I don't care what you call it, they all needed money from the government to make it through.

MontegoMan562 is a Capri RS Owner > JR1
03/28/2014 at 12:02

They did and I don't want to try and hide it, they definitely took a loan. But frankly if they didn't pay it back they'd be in deep shit just like defaulting on any loan.

MontegoMan562 is a Capri RS Owner > Milky
03/28/2014 at 12:03

Ford would have been just as successful getting a loan from a private institution aka any bank. Best deal was through the government it was the smart business choice.

HammerheadFistpunch > MontegoMan562 is a Capri RS Owner
03/28/2014 at 12:04

I haven't read the FP comments, just these. GM was mostly off the hook for responsibility because they were in bankruptcy protection, where Ford wasn't. Also, there certainly was a cost associated with it. The government OWNED that stake in GM at the time, it wasn't just buddy money.

Milky > MontegoMan562 is a Capri RS Owner
03/28/2014 at 12:06

That many be true …. but that still means they used tax payer's money.

MontegoMan562 is a Capri RS Owner > Milky
03/28/2014 at 12:13

Ahh, but guaranteed to get it back because they aren't playing around with stock/share sales to hopefully get their money back.

No gambling in the case of Ford. The government gives out loans ALL the time.

MontegoMan562 is a Capri RS Owner > HammerheadFistpunch
03/28/2014 at 12:15

Yes but they gambled.

They took a risk (even if it was a calculated one). Where as Ford was nice fixed terms. The GM shares they sold weren't going to make it back up to a point where they could get all their money back, which makes it a gamble.

For the record I'm glad the bailout happened it saved our country's ass and I'm a huge supporter of the big 3. I just don't think it's fair for Ford to get lumped in the same situation.

MontegoMan562 is a Capri RS Owner > Brewman15
03/28/2014 at 12:16

Damnit! I always forget to include that!

HammerheadFistpunch > MontegoMan562 is a Capri RS Owner
03/28/2014 at 12:21

You are right in that its not the same situation, but giving a loan out is always a gamble, that and the money was funded from the stimulus package that funded the bailouts... You can label it anyway that you feel is appropriate, but its just a label. The fact is that Ford took stimulus money and used to to build cars, they gave it back with interest, but they wouldn't have had it without the stimulus package in the first place. Its all semantics really; yes they are different, no Ford didn't go through that rough patch without government aid.

offroadkarter > MontegoMan562 is a Capri RS Owner
03/28/2014 at 12:23

I know Ford took money from the Gov't when Obama was handing out cash for developing "green cars". I know the Gov't never owned Ford like they did GM and Chrysler

Patrick George > MontegoMan562 is a Capri RS Owner
03/28/2014 at 12:24

Agreed. The ATVM loan isn't the same as a structured bankruptcy, reorganization and infusion of taxpayer cash like Chrysler and GM got. It was to retool factories for more fuel-efficient cars.

I've written a lot about this program if you're curious. Tesla, Nissan and others got the same loans. Fisker did too, which was why their failure pissed so many people off.

MontegoMan562 is a Capri RS Owner > HammerheadFistpunch
03/28/2014 at 12:48

I stopped reading after "you are right" lol!

JK, you're right, that stimulus package was required. but it's 100% not the same.

MontegoMan562 is a Capri RS Owner > offroadkarter
03/28/2014 at 12:49

we're good then

MontegoMan562 is a Capri RS Owner > Patrick George
03/28/2014 at 12:49

I'm going to dive further into all you've written. Thanks for the comment and the extra info!

davedave1111 > MontegoMan562 is a Capri RS Owner
03/28/2014 at 13:01

I can't find the loan details easily, but if Ford received preferential terms, it's certainly government help. If the government help stopped the company going under, it's not a million miles away from a bailout - although I don't know what Ford's financial position was like at the time, either.

MI_Fotografer > MontegoMan562 is a Capri RS Owner
03/28/2014 at 13:10

It depends on the definition of bail out. This article defines it as money given, not lent. Well...plenty of companies, families, people, etc. are lent money to bail them out of a tight spot. Is there interest? Do they still have to pay it back? Sure, but without that lent money, they would not have made it.

The real question here is whether or not Ford needed that loan to survive. If they did, then its a bail out.

jvirgs drives a Subaru > MontegoMan562 is a Capri RS Owner
03/28/2014 at 13:12

The biggest thing with Ford's Loan is they put their Logo/Name up as collateral. After the whole bailout mess settled down a bit there was a picture of a hellton of Ford employees arrainged in the shape of the blue and white logo stating that they had paid off their loan and had full rights of their Logo/Name back. So like the author said, Ford did not take the bailout offered by Obama, if they did they would have been under gov't ownership (a la GM) as part of the deal or if they worked out a sale like Chrysler (and may still have had some gov't ownership)

jvirgs drives a Subaru > davedave1111
03/28/2014 at 13:14

Ford was not near bankruptcy like GM and Chrysler.

BigBlock440 > MontegoMan562 is a Capri RS Owner
03/28/2014 at 14:12

Uh, so you're saying Chrysler didn't have to repay?

http://money.cnn.com/2011/05/24/aut…

http://www.nytimes.com/2011/05/25/bus…

Seems like a loan

Captain_Spadaro > MontegoMan562 is a Capri RS Owner
03/28/2014 at 14:41

They DID take money 'under the table' (in the form of tax liens or loans, I forget which), but so did BMW NA and TMS USA.

MontegoMan562 is a Capri RS Owner > BigBlock440
03/28/2014 at 14:51

Good information.

I just updated my original post to include it!

BigBlock440 > MontegoMan562 is a Capri RS Owner
03/28/2014 at 17:13

That's why there's still a debate on this. What's the difference between Chrysler and GM getting loans and paying them off (the gov't lost money on the stocks) and Ford getting loans and paying them off? Also, the claim is usually that "Fords are built without taxdollars", when they did take government loans around the same time. No, the loans weren't the same, but they were still loans from the federal government. Also, Chrysler's loan was 14% interest (because it was risky).

nellydesign > MontegoMan562 is a Capri RS Owner
03/31/2014 at 10:29

And just for some added perspective, as much as the bank bailouts were derided as unnecessary and the auto ones as necessary, the government actually made money on the bank bailouts. And without them, there would have been no lending to anyone., including the auto companies. Yes, the banks got themselves into that situation that required a bailout, yes their CEOS and such should have lost their jobs, but at least the government made back all the money they handed out and then some. Can't say the same for GM.

nellydesign > MontegoMan562 is a Capri RS Owner
03/31/2014 at 10:34

Ford had no choice but to take the loan from the government. Fact is, auto companies take out loans regularly. And they repay them just as regularly. It's an engine that drives business. At that time, the engine (i.e. BANKS) was completely seized up. They weren't lending. So the normal loans ALL car companies usually get couldn't be gotten without government help. That's why there was a bank bailout at the same time, and you could just as easily call the loans Ford got just another aspect of the larger bank bailout, since the government was stepping in to do the banks' job.

sowhat > MontegoMan562 is a Capri RS Owner
11/22/2016 at 11:56

Ford still got a low interest loan supported by the tax payers. Maybe they didn’t NEED it.....but they TOOK it!

MontegoMan562 is a Capri RS Owner > sowhat
11/22/2016 at 12:19

Besides the fact that this is in response to a 2.5 year old statement, I’ll respond anyhow.

A loan from the government is common in all business sectors. It’s not weird at all and the only way “tax payers” are brought into this is because tax payers give money to the government. Saying it’s supported by the tax payers implies that there was a special “ford loan” tax. It’s ridiculous. Ford paid back it’s loan in full and on time just like they would to a private institution. They never gave ownership of their company to the government. They never took cash they had no intent on paying back. If you want to hate Ford that’s fine. Just don’t twist the facts to get there.