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At the risk of this coming off as splitting hairs, the loan referenced in this article was issued to Ford Motor Credit. It was not to prop up Ford's automotive operations. The CPFF funds referenced in the article were directed to banks, mortgage companies and other commercial lending businesses to open credit markets. People who were legitimately capable of purchasing homes and cars were being denied loans not because they lacked credit-worthiness but because their was insufficient liquidity in the lending institutions.

Credit markets had come to a standstill and CPFF funds were made available by the Federal Reserve to all lending institutions. This was necessary because the lending institutions were unable to secure buyers for its commercial paper who themselves were frequently facing liquidity problems. Unemployment was rising quickly and people were unable, and in many cases unwilling, to pay loans that had more principle outstanding than their vehicles and houses were worth. Injecting liquidity into the credit markets didn't suddently turn back on the spigot of sub-prime loans, but it did allow credit worthy people to buy homes and cars again. The example I provided was for retail borrowers, but the same was true on the commercial side. Businesses were also being precluded from borrowing even with stellar credit ratings.

The CPFF program was initiated by the Federal Reserve in 2008 before the government approved money for the automotive operations of GM and Chrysler. The $49.5M loaned to GM was on top of money GMAC had already received ($7.5M) from CPFF. It should also be noted that CPFF funds were available to the American credit arms of many foreign companies. Among those that tapped into CPFF funds were none other than Toyota and BMW. Here is a little bit more about that -

I think it should be noted that all suppliers and creditors of Ford Motor Co. and its credit arm FMCC were repaid. The paper held by shareholders, bondholders, and creditors has maintained or increased in value. Obviously, given the bankruptcies at GM and Chrysler, investors of Ford's crosstown rivals saw their assets vaporize. I don't find it disingenuous to suggest that Ford was not in need of being bailed out.

SA Home Fool & Ford employee
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