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GM, feds reach deal to wrapup U.S. auto bailout

Dec. 23, 2012 at 5:30 AM   |   Comments

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General Motors is bailing out of its federal bailout.

"Government Motors" was the derisive moniker critics gave GM when it accepted $49.5 billion in taxpayer dollars to stay alive.

Four years later, the U.S. Treasury still owns more than 500 million shares of General Motors Co., which was born out of the bankrupt General Motors Corp.

Treasury announced last week GM is buying back $5.5 billion worth of the shares -- paying a premium of $27.50 a share -- before Dec. 31 and that the government would sell its remaining 300.1 million shares by March 2014, ending Washington's ownership role in the auto industry.

"As we come to the end of this chapter in our history, I believe most people are glad that General Motors is on the move once again, thanks to the courage and foresight of Presidents Bush and Obama and the Canadian government," GM Chief Executive Officer Dan Akerson wrote in an email to GM executives. "We are learning to be humble and to genuinely appreciate every customer."

The government has already recovered $28.9 billion and under the proposed scenario the bailout would end up costing taxpayers $12 billion to $13 billion. The government said it never anticipated making a profit. To do that GM common stock would have to sell for about $53 a share.

Treasury lost $1.3 billion when it closed the books on the $12.5 bailout of Chrysler Group last year.

The payoff was saving the U.S. auto industry and more than a million good-paying industry jobs at manufacturers and suppliers.

"The government should not be in the business of owning stakes in private companies for an indefinite period of time," Treasury Department Assistant Secretary for Financial Stability Timothy Massad said.

Don't worry about GM. The company has posted more than $16 billion in profits since 2009 and says it will have $38 billion in liquidity after it buys the 300.1 million shares.

Canada and the government of the province of Ontario gave GM $9.5 billion in 2009 and currently hold about 9 percent of GM shares, The Detroit News said. The other major stakeholder is the United Auto Workers health trust fund.


Chevy Camaro to be 'Made in USA'

Chevrolet is bringing its muscular rear-wheel-drive Camaro home.

GM says it plans to build the next-generation Camaro in Michigan -- shifting production from Oshawa, Ontario, to the Lansing Grand River Assembly Plant in 2016. The Lansing plant makes the rear-wheel-drive Cadillac CTS and ATS.

"It's nice that the American muscle car is coming home," Mike Green, president of UAW Local 652 in Lansing, told The Detroit News.


Vehicle data recorders spark privacy concerns

In an era when drivers can get a ticket in the mail generated by a robotic "red light" camera, and even non-smart cell phones allow your whereabouts be tracked, does anyone care about data recorders in cars?

After all most new vehicles sold already have so-called black boxes -- called event data recorders -- that monitor as many as 15 data elements, including a vehicle's speed, acceleration, deceleration, steering input, braking and even whether the seat belts were buckled and if airbags deployed in a crash.

The devices do not use GPS and don't record a vehicle's route or speed over an extended period.

The government's automotive watchdog, The National Highway Traffic Safety Administration, is expected to finalize a proposal that would mandate data recorders for the approximately 9 percent of new vehicles built without them.

Requiring the $20 devices on all new light vehicles, those weighing less than 8,500 pounds, would only cost automakers about $25 million.

But there are some concerns.

Carmakers and consumer groups, alike, have said the government should consider the issue of driver privacy.

"Data recording devices play a critical role in advancing safety, but motorists should own the data their vehicle generates," said Robert Darbelnet, President and chief executive officer of AAA. "Congress needs to ensure motorist rights are protected by passing legislation that prohibits access to data without permission from the owner or from a court order, unless the data is used for research purposes and cannot be tracked to a single vehicle."

The data recorded by a black box often is used by law enforcement during investigations of serious or fatal accidents and sometimes is obtained by insurers collecting information for claims investigations or litigation.

"Event data recorders help our engineers understand how cars perform in the real world but looking forward, we need to make sure we preserve privacy," said Gloria Bergquist, spokeswoman for The Alliance of Automobile Manufacturers, a trade group representing 12 major automakers including Ford, General Motors, Chrysler, Toyota and Volkswagen. "Automakers do not access EDR data without consumer permission, and any government requirements to install EDRs on all vehicles must include steps to protect consumer privacy."

All new GM, Ford, Toyota and Mazda vehicles are equipped with an event data recorder.

Congress debated mandating event data recorders for all vehicles in 2010. It didn't happen then, but the White House Office of Management and Budget this month completed its review of NHTSA's proposal clearing the way for the agency to publish its final regulation mandating installation of EDRs in all cars and pickups manufactured on or after Sept. 1, 2014.

The public had 60 days to comment after the notice.

"All auto manufacturers should be required to prominently disclose the existence of EDR devices on new vehicles, not just a sentence in the owner's manual," AAA's Darbelnet said in a statement.

"EDRs provide critical safety information that might not otherwise be available to NHTSA to evaluate what happened during a crash -- and what future steps could be taken to save lives and prevent injuries," NHTSA Administrator David Strickland said in an email to The New York Times. "A broader EDR requirement would ensure the agency has the safety-related information it needs to determine what factors may contribute to crashes across all vehicle manufacturers."

Separately, NHTSA is expected to make public a rule requiring rear-view cameras in new vehicles by the end of 2012.


Americans hitting the road for the holidays

Lower gasoline prices and an optimistic view of the economy have more than 93 million people traveling for the holidays -- up nearly 2 million from last year -- and most will go by car.

AAA projects more than one-in-four people plan to travel 50 miles or more from home this holiday season, almost equaling the record holiday travel of pre-recession 2006-07.

And it projects about 1.2 million will need roadside assistance because of breakdowns or the weather.

The price of unleaded regular gasoline is forecast to average $3.20 to $3.40 a gallon by New Year's Day, helping out the 84.4 million expected on the road.

"The year-end holiday season remains the least volatile of all travel holidays as Americans will not let economic conditions or high gas prices dictate if they go home for the holidays or kick off the New Year with a vacation," said Beth Mosher, director of Public Affairs for AAA Chicago.

About 5.6 million people are expected to travel by air during the holidays, and 3.3 million by rail, bus or cruise ship.

The AAA's projections are based on economic forecasting and research by IHS Global Insight of Boston.

The National Highway Traffic Safety Administration reported U.S. traffic deaths are expected to rise for all of 2012 after falling 1.9 percent last year.

The 32,367 traffic deaths in 2011 was the lowest per 100 million vehicle miles since 1949.

"The latest numbers show the tireless work of our safety agencies and partners, coupled with significant advances in technology and continued public education, can really make a difference on our roadways," Transportation Secretary Ray LaHood said.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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