At What Point Does T-Mobile CEO Get Dinged for False Advertising?

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[Youtube]3KmfXupi9cg[/Youtube]

The CEO of T-Mobile thinks the government, in suing to stop its merger with AT&T, simply didn’t understand how merging with AT&T would benefit customers. (h/t mistermix)

By now you have heard the news that the Department of Justice (DOJ) has filed a lawsuit to block the AT&T and T-Mobile merger in U.S. District Court. We were surprised by this sudden announcement, and DT will join AT&T in challenging the DOJ’s case in court.

DT and AT&T believe the DOJ has failed to acknowledge the significant consumer benefits of this deal. DT remains convinced that bringing together these two world-class businesses would create significant benefits for customers and the country.

I’d really like someone to sue T-Mobile for false statements. Either the filings they have and will submit are false, or this ad campaign is (my vote). But somebody’s not telling the truth.

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How Are Americans Feeling about Their Own Circumstances Now, David Plouffe?

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Perhaps I’m getting tiresome with this point, but sorry, I’m going to make it again.

Two months ago, David Plouffe dismissed the possibility that the unemployment rate would have any effect on Obama’s reelection chances. He (correctly) noted that people judged the President’s performance on the economy by their assessment of how the economy is doing for them.

Problem is, he claimed that people’s perception of how they were doing was improving.

The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers.

In fact, those terms very rarely pass their lips. So it’s a very one-dimensional view. They view the economy through their own personal prism. You see, people’s — people’s attitude towards their own personal financial situation has actually improved over time. You know, they’re still concerned about the long-term economic future of the country, but it’s things like “My sister was unemployed for six months and was living in my basement and now she has a job.” There’s a — a “help wanted” sign. You know, the local diner was a little busier this week. Home Depot was a little busier. These are the ways people talk about the economy. [my emphasis]

Only, people’s impression of the economy isn’t improving over time. In fact, they’re pretty pessimistic about the economy.

The Conference Board Consumer Confidence Index®, which had improved slightly in July, plummeted in August. The Index now stands at 44.5 (1985=100), down from 59.2 in July. The Present Situation Index decreased to 33.3 from 35.7. The Expectations Index decreased to 51.9 from 74.9 last month.

[snip]

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook. The index is now at its lowest level in more than two years (April 2009, 40.8).

[snip]

Consumers’ short-term outlook deteriorated sharply in August. Those expecting business conditions to improve over the next six months decreased to 11.8 percent from 17.9 percent, while those expecting business conditions to worsen surged to 24.6 percent from 16.1 percent. Consumers were also more pessimistic about the outlook for the job market. Those anticipating more jobs in the months ahead decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent. The proportion of consumers anticipating an increase in their incomes declined to 14.3 percent from 15.9 percent.

I take no glee in this crappy report. but I do think it’s a pretty accurate read of how people feel about their own personal circumstances and I do agree with Plouffe that this is the economic measure people make when considering whom to vote for.

So I really hope Plouffe stops trying to claim things are great when they really aren’t.

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The Auto Industry and America’s Future

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I wanted to point to four different discussions as a way to situate a larger discussion of where the auto industry is at:

The automotive industry is driving the recovery (such as it is)

As the LAT argues–most compellingly with this graphic–the rebound in auto manufacturing in this country is one of the best pieces of news in our economy today.

It actually points to both automotive sales–with dealers doing good business–and an increase in manufacturing in this country. Those are two different things.

The story points to a GM dealer with stores in three states talking about his business.

“I have been adding dozens of employees for sales and sales support,” said Mike Bowsher, who owns Chevrolet and Buick dealerships in Atlanta; Nashville, Tenn.; and Orlando, Fla. “The economy is crazy, but our retail business is still growing and getting better.”

There are likely a couple of things going on. First, remember that GM and Chrysler closed a lot of dealers during their restructuring. I’ve long argued that was a necessary step because American brand dealers were cannibalizing each others’ sales. We would expect those that remain–like Bowsher’s dealers–to be doing better as a result. And US brands (including Ford) also did well during the post-earthquake period when Toyota and Honda had shortages due.

But then there’s the manufacturing side, where LAT notes a number of manufacturers are expanding here.

And it’s not just the Big Three American manufacturers that are thriving. Nissan, VW and other foreign-based firms are expanding in the United States, putting billions of dollars into building and refurbishing plants. Start-ups Tesla Motors in Palo Alto, Fisker Automotive in Anaheim and Coda Automotive in L.A. are hiring and spending hundreds of millions of dollars designing and launching electric and hybrid vehicles.

We’ve got an entire new segment–electric vehicles–expanding into viable production runs at the same time as we’re seeing transplants open new factories. Transplants are coming here, in part, to minimize the disruption of volatility in currency exchange. But I would expect it to become easier to justify opening plants in this country now that the Japanese earthquake showed the fragility of existing supply chains. Also note that US wages are more competitive internationally.

If only our country had done something meaningful to bring down the costs corporations pay on health care, we’d probably see a lot more manufacturing opening here.

And while I’m skeptical of David Shulman’s claim that the automotive turnaround will single-handedly keep us out of a double dip–after all, the beleaguered middle class drives the volume in car sales…

The health of the U.S. economy is so dependent on autos that economists such as UCLA’s David Shulman are watching car sales to assess whether the nation’s recovery will accelerate or stall.

“If you see a 13-million-unit sales rate in the fourth quarter, that would help a lot,” said Shulman, senior economist at the UCLA Anderson Forecast. “It would be very hard to see how the U.S. would go into recession with cars selling at that rate.”

I do think it fair to assess the role of the automotive industry in what little recovery we’ve got.

Battery factories driving the manufacturing industry

Which brings us to this excellent article from yesterday’s NYT Magazine. It tells the story I wish Obama had told when he visited Johnson Controls a few weeks back: the Administration’s investments in battery factories in the stimulus bill are coming on-line and they offer perhaps the single best piece of good news in the economy.

It talks about how the US fell behind in this and other critical manufacturing segments.

The semiconductor industry, for example, led to the LED-lighting and solar-panel industries, both of which are mostly based in Asia now. “The battery is another fascinating example,” [Harvard Professor Gary] Pisano told me. “The center of gravity is Asia. But why?” If you go back to the 1960s, he says, the American consumer-electronics companies decided they were better off in Japan, and then Korea, where costs were lower. “And then you have to ask: Who had the incentives to make batteries smaller or more powerful or last longer? Not the car industry. The consumer-electronics industry did.” This explains why the U.S. is now playing catch-up with lithium-ion batteries. It also underscores the vulnerability of an economy with a shrinking manufacturing sector. “When one industry moves,” Pisano says, “there can be other industries in the future that follow it that you couldn’t even anticipate.”

It talks about how we’re having to do what developing countries have always done to catch up: copycat existing technology (even though, as is the case here, our superior research universities led the development of the technology).

Its battery technology was developed at M.I.T., and for the last several years, the company had been making its lithium-ion cells in factories in Korea and China. When I asked Jason Forcier, the head of A123’s automotive division, why the company went to Asia to make its products, Forcier said he had no choice. “That’s where the supply base was,” he said. “That’s where the know-how was — it was nonexistent in the U.S.”

Repatriating a high-tech manufacturing plant to the United States is not simply a matter of hiring the local talent. It requires good-old foreign know-how. “We call it ‘copy exact,’ ” Forcier said. “We bought a company in Korea that had the technology around this type of battery and had developed the manufacturing process there. We basically brought that here, copied it exactly and scaled it up.” A123 also brought a team of six Korean engineers to help transfer the technology to the U.S. and sent a team of Americans to Korea to learn.

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Eric Cantor’s Nuclear Failure

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As I noted last week, the VA earthquake last week happened in Eric Cantor’s district, just miles from a nuclear power plant. I reported then that the plant had lost power and switched to backup diesel generators.

But it turns out that switchover didn’t happen without a hitch. One of four generators failed to start.

The Nuclear Regulatory Commission initially reported that the plant’s emergency safeguards worked just fine as diesel generators automatically kicked in to keep nuclear rods and spent fuel safe in storage facilities and cool water ponds.

But it did not happen without a minor snag.

According to the incident report published hours after the quake, one of North Anna’s four power generators didn’t start properly, as it had been designed to. It was taken off line, and power from another generator off site was routed through to make the system fully operational. Following inspections of the facility and its sensitive parts, both reactors were brought back online.

Perhaps this is why they sent all non-emergency personnel home from the plant.

Now, it turns out that Eric Cantor is just as interested in using a potential disaster affecting his own constituents as an excuse to cut government as he was with the residents of Joplin, MO. As he did when a tornado wiped out Joplin, Cantor insisted that any federal aid be tied to cuts elsewhere in the federal budget.

“There is an appropriate federal role in incidents like this,” the Republican said after touring the damage in his district. “Obviously, the problem is that people in Virginia don’t have earthquake insurance.”

The next step will be for Virginia Gov. Bob McDonnell (R) to decide whether to make an appeal for federal aid, Cantor said. The House Majority Leader would support such an effort but would look to offset the cost elsewhere in the federal budget.

“All of us know that the federal government is busy spending money it doesn’t have,” Cantor said in Culpeper, where the quake damaged some buildings along a busy shopping thoroughfare.

Who knows what will get cut? USGS, as Cantor backed doing earlier this year? Emergency warning systems? Inspections to ensure that nuclear plant backup generators work properly in case of an emergency (and after Fukushima, how is it that those inspections haven’t already been done)?

Eventually, though, between refusing to keep up America’s infrastructure and cutting the things that help keep Eric Cantor’s constituents safe, Cantor’s anti-government radicalism will eventually lead to a preventable disaster.

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Jamie Dimon’s Company Fined $88.3 Million for Trading with the Enemy

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That’s not the technical term for violating economic sanctions against Cuba, Sudan, Iran, and Liberia (and FWIW I think the sanctions against Cuba are stupid).

Nevertheless, that’s basically what the sanctions JP Morgan Chase just admitted to violating amount to.

The big dollar amounts involve $178.5 million in wire transfers with Cubans.

JPMC processed 1,711 wire transfers totaling approximately $178.5 million between December 12, 2005, and March 31, 2006, involving Cuban persons in apparent violation of the CACR.

But the more interesting violation came when JPMC refused to turn over some documents relating to Khartoum until the government told the bank they knew JPMC had the documents.

The apparent violation of the RPPR occurred between November 8, 2010, and March 1, 2011. On October 13, 2010, OFAC issued JPMC an administrative subpoena pursuant to section 501.602 of the RPPR directing JPMC to provide certain specified documents related to a specific wire transfer referencing “Khartoum.” In response to this subpoena and a subsequent communication, JPMC compliance management failed to produce several responsive documents in JPMC’s possession, and repeatedly stated that JPMC had no additional responsive documents. OFAC ultimately provided JPMC with a list of multiple responsive documents that OFAC had reason to believe were in JPMC’s possession based on communications with a third-party financial institution. This prompted JPMC to correct its prior statements that the bank possessed no additional responsive documents and to produce more than 20 responsive documents. JPMC did not voluntarily self-disclose the apparent violation of the RPPR to OFAC. The base penalty for this apparent violation was $250,000.

And in spite of that apparent obstruction, TurboTax Timmeh Geithner’s agency still treated Jamie Dimon’s disloyal company leniently because of what they called JPMC’s “substantial cooperation.”

OFAC mitigated the total potential penalty based on JPMC’s substantial cooperation,

According to Bloomberg’s count, the Fed lent this disloyal company $68.6B after banksters like Jamie Dimon crashed the economy.

During and after the period JPMC took that money, it financed trade with Iran, tried to hide the Khartoum deal, and financed more trade with Sudan (though it sent money to Cuba and sent Iran 32,000 ounces of gold, now worth $55 million, before taking our money, in 2006). Some of this trading with the enemy was reported internally to “JPMC management and supervisory personnel;” at least some of this wasn’t the work of rogue employees.

This is the kind of MOTU that Obama considers an ally.

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Paul Kanjorski: Government Can’t Control Multinationals Anymore

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I confess. When I read Zach Carter’s account of his interview with Paul Kanjorski, my first response was to wonder why HuffPo had decided an interview with the former Congressman would make for the (admittedly very fascinating) article that resulted.

Turns out the reason is Bank of America’s woes; as one of the champions of breaking up the banks in Dodd-Frank, this ought to be an “I told you so” moment for Kanjorski, because had we already broken BoA up, it would have forestalled some of the difficulties we’re likely to experience in the near term.

And Kanjorski did address that, intimating that regulators who had left the Administration, like Sheila Bair, had been willing to entertain taking such step, but those who remain (Carter notes that Tim Geithner recently decided to stick around) basically made an agreement with the banks not to use Dodd-Frank’s authority to break them up.

But Kanjorski framed all this within the larger question of whether multinational companies have simply become too big for mere governments to control anymore.

“Because [corporations] have become so international and global in nature, it’s highly questionable whether governments can actually control corporations to a sufficient degree to prevent them from controlling governments,” said Kanjorski,

And he then demonstrated that principle in his discussion of discussions about a tax holiday, which would allow tax cheating corporations to bring money back into the US but only pay cut rate taxes.

“I’m not saying we shouldn’t adjust our tax code otherwise — there are thing we need to do there — but to give them a free ride, what are you encouraging? The next guy who doesn’t like the law will just do the same thing,” Kanjorski said of the proposed tax holiday. “The reality is, why should we be bargaining with super-national corporations who are actually acting against our interest in avoidance of what our law is? We are impotent to get them to respond.”

This takes the argument of Treasure Islands–that corporations are using secrecy havens to avoid taxes–to the level where a former senior legislator of the world’s economic powerhouse admitting to impotence in the face of the corporations because of their size and multinational status.

And he notes something often forgotten in DC: that these are no longer American companies, and their interests do not coincide with our interests.

Of course, that’s not necessarily going to help us, given that Kanjorski’s watching from the private sector as top financial regulators still do act as if these multinationals’ interests coincide with ours.

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How Would States Divvy Up the Foreclosure Settlement?

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For the record, I still doubt the 50-State-Less-the-Rule-of-Law-AGs Settlement will happen. A year in, they haven’t even agreed on the underlying guidelines for the settlement, like what they do with MERS.

But this line in the LAT’s coverage made me think of another issue that could kill that settlement.

New York and Delaware have more than a dozen attorneys working full time on their effort. They have subpoenaed or requested information from 13 financial firms, including Goldman Sachs Group Inc. and JPMorgan Chase. [Kamala] Harris would be a key addition to the investigation because California was the location of a vast number of the mortgages and foreclosures that fed into the crisis. She met with Schneiderman in San Francisco last month to discuss participating in the probe.

Harris is weighing whether she would sign on to the 50-state settlement if it gave banks immunity. The main consideration is how much money would go to California homeowners, according to a person familiar with her thinking. [my emphasis]

At least at the moment, the public explanation CA’s Attorney General is giving for her indecisiveness about which side to join is a concern over CA homeowners getting enough out of the settlement.

Now that may just be a convenient excuse to cover political indecision, but it’s a significant point. CA has a tenth of the country’s population, and it was very hard hit by the foreclosure crisis … two years ago.

As the Calculated Risk chart above shows, while California at its worst had the sixth highest percentage of homes in default, it is now 22nd (out of 42 states plus DC) on the list of current percentage of homes in default. So while CA has had the most number of residents go through this shitty process, going forward it might appear to be in much better shape than a lot of other states that weren’t as hard hit by the foreclosure crisis.

But that’s not the entire story. Note, first of all, the reason CA no longer has so many delinquencies:

Some states have made progress: Arizona, Michigan, Nevada and California. Other states, like New Jersey and New York, have made little or no progress in reducing serious delinquencies.

Arizona, Michigan, Nevada and California are all non-judicial foreclosure states. States with little progress like New Jersey, New York, Illinois and Florida are all judicial states.

That is, CA has worked through its delinquencies because its residents (like those of AZ, MI, and NV), have been subjected to the full brunt of the servicer abuses that this settlement is supposed to address, without the opportunity to challenge a foreclosure in court. So if we could measure this quantitatively (precisely what Tom Miller is trying to avoid) CA’s residents would like be even more screwed by the servicer abuses, because no one had an easy way to push back against obvious abuses.

Now look at who–at least as of the first quarter of this year–remains underwater on their house (from this Calculated Risk post). Those states most affected by foreclosures, including CA, still lead the list of states with the highest number of houses underwater, a key indicator for future defaults. The map from the New Bottom Line shows this even more graphically; put FL and CA’s population combined with their high negative equity rate, and they’ve got the largest number of potential foreclosures, over 2 million homes in each (compare that to worst hit on a percentage basis, NV, with 358,241 houses underwater, or IA, with 31,077). Finally, add in the much higher median home price in CA, and it’s clear that Harris ought to be demanding a significant chunk of the settlement funds perhaps in the 15-20% range (nevermind that even that–optimistically $4B–would do proportionately very little in CA).

I originally thought the banks would get to decide how to divvy up the settlement money (which would be prone to abuse in any case). But if the 40-45 AGs who might participate in this settlement plan to decide how the paltry $20B gets split up, then one of the only fair solutions would be for most of those states to give up the right to sue while giving CA and FL the great bulk of the settlement money. That is, a fair solution would have about 20 AGs grant immunity in exchange for little for their own residents.

Is Tom Miller willing to boast of a great settlement only to tell his own constituents (well, his nominal constituents, anyway) they will get nothing?

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The Timing of the Schneiderman Attack

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I find this article odd for the way it mentions nothing of Bank of America’s attempts to game the legal system to stay in business, much less Tom Miller, Shaun Donovan, and Kathryn Wylde’s increasing attacks on Eric Schneiderman. Because his conclusion: that BoA may go under and if it does it may take the economy with it, explains why everyone just intensified their attacks on Schneiderman.

The article, by Tom Leonard, purports to weigh the prospect of economic chaos. On the plus side, Leonard looks at prospects China might not be as bad as some people have been thinking, the promise of QE3, and news that small banks may be returning to health. On the negative, he notes that manufacturing and housing continue to decline.

But none of that matters, Leonard suggests, as much as the fate of Bank of America.

But the most perplexing economic risk factor of all may be the case of the embattled Bank of America, which found itself at the center of a swirl of rumors on Tuesday. How Bank of America fares in the days to come could tell us more about the future of the U.S. economy than any other single factor.

And on that count, Leonard writes, we have reason to worry. He looks at Bank of America’s desperate attempts yesterday to refute the analysis of Henry Blodget, who said BoA is probably worth $100 to $200 billion less than it claims to be–potentially, that is, insolvent.

A big part of Blodget’s analysis rests on this Zero Hedge argument (though I saw the graphic at Ritholtz’s site first), which in turn notes that the key analyst–who happens to be a former Merrill Lynch employee–who thinks BoA can get away with just $8-11 billion to clean up what it will owe investors for the shitpile it (and Countrywide) sold them basically just took BoA’s estimates about the quality of the shitpile rather than looking at the underlying files. Zero Hedge quotes from a filing the Federal Home Loan Banks filed last month in NY (the bold is ZH’s; the screaming red highlighting is mine):

To get from $61.3 billion to a “reasonable” settlement range of $8.8 to $11 billion, Mr. Lin made two more assumptions. He assumed that only 36% of loans that go into default will have breached Countrywide’s representations and warranties about the quality of its underwriting. That assumption is difficult to understand. Mr. Lin did not do any independent analysis of this assumption. Instead, he simply adopted Bank of America’s estimates of this percentage, which in turn appear to have been based on a completely different portfolio of loans that were subject to the underwriting standards imposed by Fannie Mae and Freddie Mac. Moreover, Mr. Lin’s assumption is inconsistent with widely publicized reports by professional loan auditors that even Countrywide loans that are merely delinquent (that is, behind on payments but not yet in default) have a “breach rate” of well over 60% and often as high as 90%.

So to recap: Leonard says we should be worried because if this analysis is correct–if BoA is actually insolvent–it’ll take the economy down.

Now, I’ll set aside for the moment the underlying analysis Leonard does–his take that BoA’s continued existence is more important than the manufacturing decline and continued housing depression. And I recognize that he posted this last night before the news that Eric Schneiderman got kicked out of Tom Miller’s tree house broke widely.

But even without last night’s news, you can’t separate the ongoing pressure on Schneiderman from the underlying issue–whether the analysis which BoA used, which depended on their own internal review of completely incomparable files, to declare themselves solvent is valid.

Because what Schneiderman is insisting on doing, both in the $8.5 billion proposed securitization settlement and the $20 billion proposed servicing settlement, is to try to look at the files.

Schneiderman is insisting on doing the analysis that BoA’s handpicked analyst didn’t do.

Now what do you suppose it means that BoA’s surrogates have gotten so angry and panicked and, well, dickish, as Schneiderman continues to insist on actually looking at BoA’s books before making a settlement with them? And do you really think it’s a coinkydink that increasing numbers of Wall Street vultures are raising doubts about what’s in those books at precisely the time Obama’s surrogates are increasing pressure on Schneiderman to drop the legal efforts to do so?

I think the timing tells us everything we need to know about the quality of BoA’s analysis. The only question, really, is whether they’ll be able to abuse the legal system so as to continue to hide that reality.

Update: Schneiderman just sent out email vowing to continue:

You might have been following the latest developments related to the national settlement of the mortgage probe, including this story in today’s Huffington Post about our tough fight for a comprehensive resolution to this crisis.

Let me tell you directly: I am deeply committed to pursuing a full investigation into the misconduct that led to the collapse of America’s housing market, and to seeking a resolution that gives homeowners meaningful relief, allows the housing market to begin to recover, and gets our economy moving again.

Our ongoing investigation into the housing crisis cannot be shut down to accommodate efforts to settle quickly and give banks and others broad immunity from further legal action. If you have any thoughts or concerns about this critical issue, please contact me at 1-800-771-7755, or send a message via Facebook or Twitter.

Thank you for your support,

Eric T. Schneiderman

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IA AG Tom Miller: Playing “Survivor” with Homeowners’ Futures

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You may have heard that the Obama Administration and IA Attorney General are playing a giant game of Survivor with the homes of struggling Americans as the grand prize: they’ve kicked NY AG Eric Schneiderman off the island.

The New York Attorney General’s office was removed from a group of state attorneys general that is working on a nationwide foreclosure settlement with U.S. banks, according to a state official.

New York Attorney General Eric Schneiderman, who has raised concern about terms of a possible deal, was removed from the executive committee of state attorneys general, according to an e-mail today from Iowa Assistant Attorney General Patrick Madigan.

Only they made a key mistake in their little game of Survivor.

Update: I obviously misread IA Asst AG Patrick Madigan and IL AG Lisa Madigan. Meaning Miller’s the one making this public, not AG Madigan.

Well then I guess he’s just being a dick.

Update: Wow, in the longer version of the Bloomberg story, Miller gets even more dickish:

“New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with,” Miller said. For a member of the executive committee, that “simply doesn’t make sense, is unprecedented and is unacceptable,” Miller said.

[And I removed my earlier screwup.]

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The Other Auto Bailout: Ford, Toyota, … and Harley Davidson?

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As I noted yesterday, Bloomberg has made some really cool visual tools showing the lending the Fed did over the years.

So I wanted to use it to show the other auto bailout: lending to Ford and Toyota at a time when the auto market was fragile and credit was scarce.

Showing them side-by-side makes it clear that at the same time the government was discounting GM and Chrysler’s claim that unavailability of credit was a big part of their woes (and making them beg harder to get credit from the government), the Fed was providing credit to both Ford and Toyota.

Though you need to go further to see why the companies were taking the loans. The Ford image shows that it took the loans at a time when its market capitalization was in the toilet (remember its stock mirrored that of GM, and ostensibly to help GM out Ford participated in the testimony to Congress).So at the peak (and also around the time Chrysler was going into bankruptcy) the loans were worth almost 175% of Ford’s market value.

Note these loans were to Ford Credit: most likely, this reflects Ford relying on government loans to extend credit to its dealers to keep product moving.

Toyota’s loans, however, represented a much smaller percentage of its market value (which never fell as much as the others) and were significantly smaller than the loans Ford took out. But the loans also came during the period when Chrysler and GM were under the greatest stress.

Not surprisingly, Toyota paid off these loans more quickly than Ford did, in 148 days as compared to 323.

Ford and Toyota weren’t the only auto industry companies getting loans. BMW also had over $4B in loans, at times up to 27% of its value. There’s a $1.7B loan to Chrysler Financial (AKA Cerberus).

Perhaps the biggest surprise of all of this are Harley-Davidson’s $1.3B loans, at times over half its market value.

Now, I’m no expert on the motorcycle business. But like the auto business, it depends on moving product (both vehicles and parts) to independently operated dealers, which in turn rely on credit. So like the auto industry, the credit crunch resulting from the crash must have devastated it.

Add in the fact that, like GM, H-D ended up restructuring. It was also revamping its manufacture; it was also restructuring its labor agreements. It also had had profit woes which hit its stock price. Which made fall 2008 a shitty time to lose access to credit.

But unlike GM, it got Fed lending, which appears to have helped it weather the crisis.

Now, don’t get me wrong. In the long run, GM will be far better off having gone through its restructuring. But there was a time in 2008 when the folks in DC refused to believe that the auto business’ woes were, in significant part, credit-driven.

But it appears the Fed was well aware of that fact.

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