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.
FAQs
The Ford loan, if taken in full, would be significantly larger than the total of $8 billion that has been lent under the program since it was authorized in 2007. Ford previously took out a $5.9 billion loan under the program in 2009. That loan was fully repaid as of last year, according to the DoE.
Does Ford still owe bailout money? ›
"The ATVM loan is repayable in quarterly installments of $148 million, which began in September 2012 and will end in June 2022." Documents filed by Ford show the company owes payments of $591 million in 2020, $591 million in 2021 and $289 million in 2022.
Did Ford just take a $9 billion dollar loan? ›
The whopping $9.2 billion will be used to build three EV battery factories as Ford looks to boost domestic capacity. The loan is also the largest (by far) since the US auto bailout sparked by the global financial crisis in 2009, according to Bloomberg. Ford will use the funds to build three new battery factories.
Did Ford take a bailout in 2006? ›
in 2006. Mulally said that two years ago Ford took its plan — similar to the one it submitted to Congress last week — to 40 banks in an effort to get financing to unify its production system and for research and development. It originally estimated a need for $17 billion, but raised additional funds just in case.
Does Ford have more debt than GM? ›
Additionally, different metrics indicate that GM seems to be the less risky investment: compared to Ford, the company has a higher EBIT Margin [TTM] (7.66% compared to 4.85%), a lower 24M Beta (1.46 compared to 1.57) and a lower Total Debt to Equity Ratio (160.36% compared to 325.42%).
How much debt does Ford owe? ›
The Ford Motor Company reported total debt around 139 billion U.S. dollars in 2022.
Why didn t Ford take the bailout? ›
Though GM and Chrysler eventually did get a bailout — Ford did not need help because it had fortuitously secured a large amount of financing shortly before the crisis — it was not all sweetness and light.
Has Ford ever been in debt? ›
Ford Motor long term debt for the quarter ending June 30, 2023 was $93.895B, a 10.45% increase year-over-year. Ford Motor long term debt for 2022 was $88.805B, a 0.46% increase from 2021. Ford Motor long term debt for 2021 was $88.4B, a 19.88% decline from 2020.
Did Ford just take out a huge loan? ›
1st Gear: Big Loan. The U.S. Department of Energy will loan Ford $9.2 billion and, in return, it will build three battery plants with its partner SK, multiple outlets reported Thursday morning.
Why did Ford lose so much money? ›
Ford lost a billion dollars on its EV unit last quarter. The company loses money on every Ford Lightning it sells — and that was before it knocked thousands of dollars off the sticker price this summer, trying to keep up with a Tesla-triggered price war that's pulling EV prices down.
Ford Motor owes the government $5.9 billion it borrowed in June 2009, the same month GM filed for bankruptcy. By Sept. 15, Ford needs to start paying that money back. In a government filing, the carmaker said $577 million is due within the next year, and the full amount must be paid off by June 15, 2022.
Which bank is behind Ford Money? ›
Ford Money is a trading style of FCE Bank plc. which is a public limited company incorporated in the UK, wholly owned by Ford Motor Company.
Which car company didn t take the bailout? ›
Chrysler emerged as a newly merged company with Italian-based Fiat. Ford did not ask for a government bailout, but received other financial assistance.
Who got the biggest bailout in 2008? ›
Citi received the largest amount of TARP funding, "a larger bailout than any other U.S. bank." Total stake has been liquidated with income received of $19.6 billion.
Who was president during 2008 bailout? ›
The Emergency Economic Stabilization Act of 2008, often called the "bank bailout of 2008" or the "Wall Street bailout", was proposed by Treasury Secretary Henry Paulson, passed by the 110th United States Congress, and signed into law by President George W. Bush.
How much of the auto bailout was paid back? ›
Ten years later, Zandi is unequivocal that the auto bailout was crucial to reviving U.S. industry in the Great Recession. For one thing, the U.S. recovered all but about $9 billion of the auto bailout money.
Did the government get paid back for 2008 bailout? ›
Obama and others who were involved often say that they were all ultimately paid back by the companies that benefited from the funds. ProPublica, the nonprofit investigative news organization, calculated in 2019 that after repayments the federal government actually made a profit of $109 billion.
Did Ford offer to buy back bonds as it works to overhaul balance sheet? ›
The auto maker plans to extinguish up to $5 billion in high-priced debt it took on due to the pandemic. Motor Co. on Thursday said it would buy back up to $5 billion in high-priced debt, a move that comes as finance chief John Lawler works to overhaul the car maker's balance sheet and improve its credit rating.
