Fed Bails Out Corporate Friends: Verizon, GE, McDonald's

[SAMSON123]

Plenty of money to bail out their ILLUMINATI friends, but none for the citizeens

December 01, 2010 3:47 PM
Fed aided Verizon, GE and others amid credit crisis

Data released by central bank shows how dramatically the credit markets froze for corporations around the country. Verizon, for instance, needed $1.5 billion in Fed loans over two days.
By Aaron Elstein

As the financial crisis hit full-tilt in October 2008, the Federal Reserve was not only furiously propping up banks, but it also repeatedly came to the aid of such companies as Verizon Communications, McDonald's and Harley-Davidson.

The Fed bought nearly $800 million worth of short-term debt known as commercial paper from Verizon on Oct. 27, 2008, and bought about another $700 million the next day, according to data released by the central bank on Wednesday that details some 21,000 Fed transactions worth $3.3 trillion over the past two years.

The Fed bought about $350 million worth of commercial paper in late October and early November 2008 from Harley-Davidson. The Fed bought commercial paper from McDonald's seven times through the spring of 2009, acquiring about $175 million worth over that time.

Commercial paper is the lifeblood for many businesses which rely on it to help meet near-term obligations, such as making payroll or paying suppliers. The commercial paper market, however, froze solid as the financial crisis escalated, forcing the Fed to step in and buy the paper not just from issuers such as Citigroup and Goldman Sachs, but also from Verizon, General Electric, McDonald's, Caterpillar and the National Rural Utilities Cooperative, among many others.

The Fed data present a chilling portrait of the nation's banking crisis quickly spreading throughout the economy and threatening broad swaths of the industrial and consumer sectors in the U.S. and abroad. The Fed even bought commercial paper issued by the Republic of Korea and several European banks.

A Verizon spokesman said the company repaid the Fed in full when its debt matured within 90 days.

http://www.crainsnewyork.com/article/20101201/FREE/101209981

[chadstallion]

that's what friends are for.

[225for70]

It's not that Verizon or Macdonald's were insolvent like the zombie banks by any stretch of the imagination..However, these companies go to the Money markets to fund there short term liabilities..But the credit markets froze completely...

Completely different from the banker bail out crap.

[SAMSON123]

It's not that Verizon or Macdonald's were insolvent like the zombie banks by any stretch of the imagination..However, these companies go to the Money markets to fund there short term liabilities..But the credit markets froze completely...

Completely different from the banker bail out crap.

These same companies have been for years the recipients of CORPORATE WELFARE. In america CORPORATE WELFARE consumes more than FIVE TIMES the welfare that is offered to the citizens who are in a destitute state and need the help. Corporations like DUPONT, DOW, GE, GM, MONSANTO etc etc have had their hands out for decades, so this bailout is no surprise. Sadly few seem to understand that MOST of the businesses that have closed because of these short term loans, was because the banks REFUSED to continue the practice once they got themselves in trouble with their fraudulent bank loans and real estate scams. They stopped the short term loans which caused the businesses that operated on these short term loans, to pay employees and buy supplies, to go out of business. In the case of the US government, it provided these loans to the companies mentioned in the article which kept them from failure or at the very least difficult financial difficulties, while ignoring all of the other businesses and farmers who found themselves having to close their businesses due to the inability to pay employees or buy supplies.

[SAMSON123]

UPDATE: Seems the hands that were extended for bailouts now includes these PROFITABLE companies as well

Ford, BMW, Toyota Took Secret Government Money



Ford, BMW, Toyota Took Secret Government Money In the depths of the financial collapse, the U.S. Federal Reserve pumped $3.3 trillion into keeping credit moving through the economy. It eventually lent $57.9 billion to the auto industry — including $26.8 billion to Ford, Toyota and BMW.

The Fed on Wednesday was forced to reveal the identity of the companies it aided during the crisis, after contending to Congress that keeping their identities and the details of such lending secret was essential. Much of Wall Street, and corporate giants such as General Electric, Harley Davidson and McDonald's, took advantage of the Fed's help. We've done the math on how the Fed propped up the auto industry.

While Chrysler and General Motors had to go to Congress to beg for cash in 2008, every other automaker's finance arm was having trouble as well. Typically, once they lend money to a buyer, they sell the loan, get the cash upfront, then pump the proceeds back into the business. They also take out short-term loans called commercial paper that keeps the day-to-day business afloat. The crash cut the circuit, raising the chances the automakers couldn't make loans to buyers and keep selling new vehicles.

That's where the Fed stepped in. In normal circumstances, the Fed only lends money to banks, leaving the decisions about who should get credit to them. But when the financial markets started to collapse in late 2008, the Fed set up several programs to lend money directly to corporations, a highly unusual step.

According to the data, from October 2008 through June 2009 the fed bought $45.1 billion in commercial paper from the credit arms of four automakers - Ford, BMW, Chrysler and Toyota - along with GMAC (the former General Motors credit arm). Of those, Ford sold the most, with $15.9 billion.

The Fed also lent $13 billion to investors who bought bonds backed by loans to new car buyers from automakers and banks. The Fed made clear that while investors got the loans, the move was meant to keep the lenders in business; the credit arms of Ford, Chrysler, Nissan, Volkswagen, Honda and Hyundai all benefited directly.

Ford spokeswoman Christin Baker said the two programs "addressed systemic failure in the credit markets, and that neither program was designed for a particular company, or even a particular industry." Ford Credit has disclosed through SEC filings and conference calls with media and investors that it was taking part in both programs.

BMW told Bloomberg that the Fed lending "supported our financial profile and offered us an additional funding source, especially at times when the money markets and capital markets did not function properly and efficiently."

According to the Fed, the commercial paper loans have been paid in full, while some $2 billion remains outstanding on loans for bond investors.

The secrecy surrounding the details of the loans only masked how much aid corporate America and Wall Street needed. While General Motors and Chrysler took the brunt of the blowback for relying on government handouts, the reveal of the Fed numbers show that a far bigger slice of the U.S. auto industry needed help.

http://jalopnik.com/5704575/