Friday, June 12, 2009


According to this article, Ron Bloom of Obama's Auto Task Force says the US Treasury has a reasonable likelihood of getting its money back. Really?

The Auto Task Force should be compelled to provide the analysis that supports that the Treasury will get its money back. It is a pretty simple analysis which I assume the task force did before driving the Chrysler and GM deals.

The analysis should be based on a cash flow and earnings estimates going out for several years. It should be based on reasonable underlying assumptions which the task force has adequately vetted. The resulting analysis should demonstrate how and when the Treasury will be repaid in each matter.

Presumably the analysis shows that there is a reasonable likelihood of repayment. However, if the analysis shows too much risk to the repayment, the task force and the Treasury should be held accountable for giving the trade credit a free ride (full repayment that is never written about) and for giving the UAW too much on the backs of the taxpayers.

Just saying there is a reasonable likelihood of repayment without the analysis may not carry much weight. If there is any reasonable risk of non-repayment, the trade and UAW should have received less until the Treasury is repaid.

I don't have the information to do the analysis, but my gut says it may not be pretty.

Cheers, Mike

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