Posts Tagged ‘bankruptcy’

Hostess Liquidation Sets Off Online Twinkie Run

Wednesday, December 5th, 2012

As Hostess Brands, Inc. – the 80-plus-year-old baker of such iconic brands as Twinkies, HoHos, Hostess CupCakes, DingDongs and Wonder Bread – enters into liquidation and probable acquisition, the online price of the sugar-filled delicacies is soaring.

As soon as Hostess announced the end of production, Twinkie lovers started scrambling to buy every Twinkie they could find.  In some cases, the buyers visited eBay and Craigslist to sell their hoards – presumably at a significant profit.  Price tags for a box of 10 Twinkies hit four and even five digits; the retail price is in the $5 range.  One enterprising eBay seller, who is asking $10,000 for a box of Twinkies, has vowed to donate 10 percent of the proceeds to local charities.  Despite the conventional wisdom about the longevity of Twinkies, the majority purchased in mid-November will be past their sell date in approximately one month.

Chances are that another company will buy out Hostess Brands and breathe new life into its products.  The most likely purchaser is C. Dean Metropoulos and Co., a private-equity firm that specializes in resurrecting troubled heritage brands, such as Pabst Blue Ribbon beer, Bumble Bee Tuna, Chef Boyardee pasta, and PAM cooking spray.  Of greatest value to any purchaser are Hostess’ intellectual property rights, which allow the manufacture and sale of the brand’s flagship products.

Hostess’ intrinsic brand value means that acquiring the name is a good business decision for the eventual buyer. According to Michael J. De La Merced, “One company’s castoffs can be another company’s golden goose — or in this case, cream-filled confection.  It is a common trade in bankruptcy court.  Sellers are hoping to drum up cash for their creditors, and buyers are betting they can revive the brands.  Even though consumers are increasingly crunching on kale, Twinkies and other sugary snacks still make loads of money.  Hostess makes billions of dollars of sales each year.”

What’s Wrong With Homeowners Defaulting? Companies Do It all the Time

Monday, February 13th, 2012

When we say that a company “went bankrupt,” we imply that it had no other choice. But American Airlines deliberately filed for bankruptcy. The airline had four billion dollars in the bank and was in a position to pay its bills. American has been losing money for some time and its board decided that it made no sense to continue throwing good money after bad. By declaring bankruptcy, American can trim its debt, break its union contracts, so that it can slim down and cut costs.

According to James Surowiecki, a financial writer for The New Yorker, “American wasn’t stigmatized for the move. Instead, analysts hailed it as ‘very smart.’  It is now generally accepted that when it’s economically irrational for a company to keep paying its debts it will try to renegotiate them or, failing that, default. For creditors, that’s just the price of business. But when it comes to another set of borrowers the norms are very different. The bursting of the housing bubble has left millions of homeowners across the country owing more than their homes are worth. In some areas, well over half of mortgages are underwater, many so deeply that people owe forty or fifty per cent more than the value of their homes. In other words, a good percentage of Americans are in much the same position as American Airlines: they can still pay their debts, but doing so is like setting a pile of money on fire every month.”

Families so deeply underwater realize that they will never make a return on their investment in their homes. The rational solution for many would be a “strategic default” – walking away from the mortgage and letting the house revert to the bank. Yet the vast majority of underwater borrowers are still paying their mortgages; studies suggest that perhaps only 25 percent of all foreclosures are strategic. When you consider how much housing prices have fallen, one can’t help but wonder why more people aren’t just walking away.

According to Surowiecki, “Part of the answer is practical. Defaulting (even in so-called non-recourse states) is still a lot of trouble, and to most people it’s scary. In addition, homeowners are slow to recognize how much the value of their homes has dropped, and have inflated expectations of how much it will rise in the future. The biggest hurdle, though, is social: while companies get called ‘very smart’ for restructuring their contracts, there’s a real stigma attached to defaulting on your mortgage. According to one study, eighty-one per cent of Americans think it’s immoral not to pay your mortgage when you can, and the idea of default is shaped by what Brent White, a law professor at the University of Arizona, calls a discourse of ‘shame, guilt, and fear.’ When the housing bubble burst, the banking industry was terrified by the possibility that homeowners might walk away en masse, since that would have stuck lenders with large losses and a huge number of marked-down homes. So strategic default was portrayed as the act of dishonorable deadbeats. David Walker, of the Peterson Foundation, waxed nostalgic about debtors’ prisons, and John Courson, the head of the Mortgage Bankers Association, argued that defaulters were sending the wrong message – to their family and their kids and their friends.”

“Paying your debts is, as a rule, a good thing,” according to Surowiecki. “But the double standard here is obvious and offensive. Homeowners are getting lambasted for doing what companies do on a regular basis. Walking away from real-estate obligations in particular is common in the corporate world, and real-estate developers are notorious for abandoning properties that no longer make economic sense. Sometimes the hypocrisy is staggering: last winter, the Mortgage Bankers Association — the very body whose president attacked defaulters for betraying their families and their communities —got its creditors to let it do a short sale of its headquarters, dumping it for thirty-four million dollars less than the value of the building’s mortgage.”

In the case of debt, the corporate attitude is do as I say, not as I do. While homeowners are advised to think of more than the bottom line, banks do business in coldly rational terms. They could have helped keep people in their homes by writing down mortgages (similar to the restructuring that American Airlines’ debt holders now face). “And there are plenty of useful ideas out there for how banks could do this without taxpayer subsidies and without rewarding the irresponsible,” Surowiecki said.  “For instance, Eric Posner and Luigi Zingales, of the University of Chicago, suggest that, in exchange for writing down mortgages in hard-hit areas, lenders would take an ownership stake in a house, getting a percentage of the capital gain when it was eventually sold. Lenders, though, have avoided such schemes and haven’t done mortgage modifications on any meaningful scale. It’s their right to act in their own interest, but it makes it awfully hard to take seriously complaints about homeowners’ lack of social responsibility.”

Of course, many borrowers made bad decisions and acted irresponsibly. But so did lenders — by handing out too much money and not requiring sensible down payments. So far, banks have been partially insulated from the consequences of those bad decisions, because Americans have been so obliging about paying off over-inflated mortgages. Strategic defaults would help distribute the pain more evenly and, if they became more common, would force lenders to be more responsible in the future. It’s also possible that a wave of strategic defaults — a De-Occupy Your House movement — would get banks to take mortgage modification more seriously, which would be all for the better. The truth is that banks have been relying on homeowners to do the right thing. It might be time for homeowners to do the smart thing instead, Surowiecki concluded.

CFTC Gives Tentative Green Light to Volcker Rule

Wednesday, February 1st, 2012

The federal Commodity Futures Trading Commission (CFTC) proposed limiting banks’  proprietary trading and hedge fund investments under the Dodd-Frank Act’s Volcker rule. The CFTC  3-2 vote makes it the last of five regulators to seek public comment on the proposal. This vote opens the measure to 60 days of public comment.  The rule, named for former Federal Reserve Chairman Paul Volcker, was included in Dodd-Frank to rein in risky trading at banks that benefit from federal deposit insurance and Fed discount window borrowing privileges.

The CFTC stayed mum when the Fed, Federal Deposit Insurance Corporation, Securities and Exchange Commission and Office of Comptroller of the Currency released their joint proposal last year. The four agencies extended the comment period on their proposal until February 13 after financial-industry groups and lawmakers cited the complexity of the rule and the lack of coordination with the CFTC in requesting an extension.

The CFTC may soften Dodd-Frank a bit, granting Wall Street banks exceptions to rules requiring dealers to sensibly believe their derivatives are suitable for clients and in the best interests of endowments and other so-called special entities.  The rules “implement requirements for swap dealers and major swap participants to deal fairly with customers, provide balanced communications, and disclose material risks, conflicts of interest and material incentives before entering into a swap,” CFTC Chairman Gary Gensler said.

Opponents say the CFTC proposal would cause “severe market disruption” by transforming the relationship between swap dealers and clients such as pensions and municipalities, according to Sifma and the International Swaps and Derivatives Association, Inc.. Under the final rule, dealers must disclose material risks and daily mid-market values of contracts to their clients. The CFTC may also complete rules designed to protect swap traders’ collateral that is used to reduce risk in trades. The rule insulates the collateral if the broker defaults, while allowing the customer funds to be pooled before a bankruptcy, according to a CFTC summary of the regulation.

Commissioner Scott O’Malia voted in favor or the rule, but said he did not want to give market participants “a misleading sense of comfort” that it would have prevented the loss of customer money at the brokerage giant.  “This rulemaking does not address MF Global,” O’Malia said. “This rulemaking would not have prevented a shortfall in the customer funds of the ranchers and farmers that transact daily in the futures market. Nor would it have expedited the transfer of positions and collateral belonging to such customers in the event of a collapse similar to that of MF Global.”

Commissioner Jill Sommers, who voted against the rule, criticized the rule for doing nothing to protect a futures commission merchant’s futures customers.  “Given recent events, we need to re-think this approach so we can provide adequate protections, in a comprehensive and coherent way, to swaps customers and to futures customers,” Sommers said. “I do not favor a piecemeal approach to customer protection.”

We Deliver – More Slowly – For You

Wednesday, December 21st, 2011

First-class mail is likely the next casualty as the United States Postal Service (USPS) looks for ways to stave off bankruptcy. The USPS is planning to shutter 252 mail processing centers nationally and slow first-class delivery as soon as spring, citing steadily declining mail volume.

According to USPS vice president David Williams, the agency wants to effectively eliminate the likelihood that stamped letters will arrive at their destination the next day.  Williams says the postal service is not “writing off first class mail”; rather, it must respond to changing market realities in which people are turning more to the Internet for email communications and bill payment.  After peaking in 2006, first-class mail volume is now at 78 million.  It is projected to drop by approximately 50 percent by 2020.

The estimated $3 billion in reductions are part of a wide-ranging effort by the cash-strapped USPS to cut costs without receiving any help from Congress.  Although the changes would provide short-term relief, they ultimately could prove counterproductive by moving more business onto the Internet.  The move has the potential to slow everything from check payments to Netflix’s DVDs-by-mail, add costs to mail-order prescription drugs, and threaten the existence of newspapers and time-sensitive magazines.

Ideally, first-class mail would be delivered in two to three days, a change from the current one to three days in the 48 contiguous United States.  But, the postal service said mailers “who properly prepare and enter mail at the processing facility prior to the day’s critical entry time” could have their mail delivered the following delivery day.”  Magazine delivery could take two to nine days.

“It’s a potentially major change, but I don’t think consumers are focused on it and it won’t register until the service goes away,” said Jim Corridore, an analyst with S&P Capital IQ, who tracks the shipping industry.  “Over time, to the extent the customer service experience gets worse, it will only increase the shift away from mail to alternatives.  There’s almost nothing you can’t do online that you can do by mail.”

The post office already has announced a penny increase in first-class mail to 45 cents, whch goes into effect on January 22.  “We have a business model that is failing.  You can’t continue to run red ink and not make changes,” said Patrick Donahoe, Postmaster General.  “We know our business, and we listen to our customers. Customers are looking for affordable and consistent mail service, and they do not want us to take tax money.”

According to Donahoe, “We are in a deep financial crisis today because we have a business model that is tied to the past.  We are expected to operate like a business, but we do not have the flexibility to do so.  Our business model is fundamentally inflexible.  It prevents the postal service from solving problems and being effective in the way a business would.”

Senator Susan Collins, (R-ME), the ranking Republican of the Senate Homeland Security and Governmental Affairs Committee, was unhappy with the USPS’ plans.  “Time and time again in the face of more red ink, the Postal Service puts forward ideas that could well accelerate its death spiral,” Collins said.  “Closing thousands of rural post offices, eliminating Saturday delivery, and slowing first-class mail delivery could harm many businesses and their customers.”

Writing in the Washington Post’s Federal Eye column, Ed O’Keefe commiserates with postal customers, but offers no quick fixes. “And what about those customers who rely on first-class mail to get letters delivered the next day?  Donahoe and other officials hope those customers will switch to Priority or Express Mail, a more expensive option that can guarantee deliveries by a certain date.”

If the plan is approved by the Postal Regulatory Commission, the changes have the potential to save about $3 billion, and allow the Postal Service to cut approximately 28,000 jobs.

According to USPS spokesman Dave Partenheimer, the changes allow increased time between deliveries, clearing the way to close or consolidate mail processing centers across the country.  “It’s no longer a challenge of growth — it’s a challenge of staying ahead of the cost curve,” Partenheimer said.  “The fact of the matter is, our network is too big.”

Sally Davidow, a spokeswoman for the American Postal Workers Union, said the changes will hurt communities and take the Postal Service in the wrong direction.  “They should be trying to speed up and modernize the mail, not slow it down and make it less relevant in the digital age,” she said.

Davidow said the retirement payment mandate and overpayment into the Postal Service’s pension accounts are the main culprits.  She believes that USPS leadership should focus on pressuring Congress to fix them instead of cutting service and jobs.  “Addressing those two things would go a very long way toward resolving the crisis and giving the Postal Service the breathing room and the capital it needs to modernize and to be relevant in the digital age,” Davidow said.

The postmaster general offered his opinion on that.  “The American public pays bills online,” Donahoe concluded.  “We can’t sit back for another five, or six, or 10 years and wait for these changes.”

Harrisburg, PA, Goes Broke

Monday, November 14th, 2011

Pennsylvania’s capital city, Harrisburg,  filed for a rare Chapter 9 bankruptcy protection, listing debts of $500 million and assets of $100 million, according to an attorney for the city council.  Mark D. Schwartz said he filed the documents by fax to a federal bankruptcy court.  Such a filing could not be confirmed with the U.S. Bankruptcy Court in Harrisburg.  The filing comes on the heels of the city council’s 4-3 vote Tuesday night to seek bankruptcy protection.  “This was a last resort,” said Schwartz.  “They’re at their wits end.”

They were tired of being humiliated and denigrated,” Schwartz said, referring to the four council members who voted for a bankruptcy filing.  Chapter 9 is “a much better forum if you really want to address the financial problems of the city,” Schwartz noted.  Chapter 9 bankruptcy allows the financial reorganization of cities, towns, taxing districts, counties, school districts and municipal utilities.

Unfortunately, this is a scenario that other cash-strapped cities across the country could face in the future.  This comes on the heels of Topeka, KS, repealing a law against domestic violence because of the cost of prosecuting offenders.

“This really is our only option out there, ” Councilman Brad Koplinski said. “I believe this is the only thing that will work.”  Controller Dan Miller said that Harrisburg had attempted to tackle the debt problem for years and that he felt the state of Pennsylvania had tried to “railroad” the city’s citizens.  “It’s unfortunate that it came to this,” Miller said.  In June, the Pennsylvania legislature passed a bill saying bankruptcy would result in the loss of state aid, and added an amendment to the bill in September that permits a state takeover of Harrisburg.  The city must repay $310 million in bonds and restructure its debt, as well as reimburse Dauphin County and insurer Assured Guaranty Municipal, which both made payments that the city missed on its incinerator project.

“The size of the outstanding bond debt is overwhelming,” according to the bankruptcy filing.  “Negotiations are impracticable with one group of creditors where negotiations with another key group have hit an impasse.”  Harrisburg’s bondholders include Ambac Financial Group, Inc., with more than $70 million of revenue bonds, and Covanta Holding Corporation, with about $120 million of bonds and advances of funds.

“The city meets the ‘generally not paying’ definition of insolvency, because it has repeatedly failed to pay the guaranteed incinerator bond debt as it has become due,” according to Harrisburg’s filing.  “Under the guarantees the city would need to cover a combined $83 million of past due payments and the 2011 debt service.”

Saab Story

Thursday, July 7th, 2011

Venerable Swedish automaker Saab is unable to pay its employees and is likely headed into bankruptcy.  Saab and Zeewolde, Netherlands-based owner Swedish Automobile NV, are in talks to raise cash, the company said.  Options include selling and leasing-back the factory in Trollhaettan, Sweden.  “There can however be no assurance that these discussions will be successful or that the necessary funding will be obtained,” said Swedish Automobile, which was previously known as Spyker Cars NV.

Saab’s chances are “slim,” according to Martin Crum,  an analyst at Amsterdam’s Effectenkantoor BV.  “The company is still not able to produce cars; that’s the main concern.  If you don’t sell cars, you don’t get cash in.”  The pending property sale “can provide some badly needed liquidity for the short term, but for the longer term they of course need more,” Crum said.  Saab came close to being a casualty of GM’s brand shedding after its government-backed bankruptcy, when it stopped the production of Saturn, Hummer, and Pontiac cars.  The Swedish unit was slated to shut down after a group led by Koenigsegg Automotive AB pulled out of talks.  Spyker’s bid came after GM had already begun to shut down Saab, ultimately paying $74 million in cash and $326 million in preferred shares.

A spokeswoman for Saab admitted that approximately 2,200 office workers, designers and engineers might not be paid as Sweden goes into a holiday.  Apologizing for leaving production line staff without paychecks, she said “The last thing we want is to be forced to come with this very sad news the day before a major Swedish holiday.  We would not have done this if we were in a situation where we had an alternative.”  She said Saab was not actively preparing for bankruptcy, but the carmaker is making an eleventh-hour bid for cash by negotiating a sale-and-lease back of its Trollhättan factory with unnamed parties.  “(Bankruptcy) is not the scenario that we are working with.  We are working very intensively on securing short-term financing to improve the situation of the company, of course to pay our employees and to work with suppliers to get production going again.”

Neil King, an analyst at IHS Automotive, said Saab seems to have been left behind by the emerging market boom in nations such as Brazil, China and India.  “They suffered as a result of the financial crisis but unlike their peers, they have not capitalized on booming demand for premium cars in the emerging markets.”  Saab production fell sharply from 123,000 in 2007 to 33,000 in 2010.

Swedes are mourning the waning of the Saab brand,  which was established in 1937 and became one of two internationally known Swedish automakers along with Volvo.  At present, Saab appears to be on its last leg as there has been no recent talk of a government bailout or rescue plan.  Upon hearing the news, one employee said “It is dreadful.  Completely unbelievable.  I get chest pains,” worker Fredrik Almqvist said.  “How on earth are we supposed to pay our bills?”  “I have worked at the factory and know many who worked there.  You should never give up hope, but right now it looks extremely bleak,” Veli-Pekka Saikkala, a representative of IF Metall, said.

Writing on the Automobile website, Donny Nordlicht  says that Saab appears to have had a bit of a reality check, as its latest press statement says ‘There can, however, be no assurance that these discussions will be successful or that the necessary funding will be obtained.’ Saab’s newfound realistic outlook is not assuaging fears, however.  IF Metall is demanding that the automaker pay its members wages, saying it needs to resolve the short-term cash flow issues immediately.  If Saab does not pay up, IF Metall has threatened to enter legal proceedings to procure the wages, something that would most likely end only in bankruptcy for the automaker.”

Netflix Beats Blockbuster

Wednesday, June 1st, 2011

While Blockbuster may have at one time ruled the world of video rentals, in recent years it has been overtaken by Netflix.  The internet-based DVD movie and television rental-by-mail service, which came to so dominate the market, has forced Blockbuster into bankruptcy.  I wrote about this for the Huffington Post back in January, but I saw this cool graphic recently which illustrates this David and Goliath story compellingly.

According to the Daily Infographic website, Netflix has become so popular that, “Once having drawn in $6 billion in revenue, Blockbuster now owes millions to companies like Fox, Warner Brothers and Sony.  With their radically different business model and youthful appeal, Netflix shows how a small company can come in at any time and take out a giant.  Netflix knew what the people wanted, they wanted their movies delivered to them and they wanted as many as they could get in while paying a set price each month.”

Netflix gives the public what they want.

Economists Say U.S. Economy Is on the Road to Recovery

Wednesday, April 27th, 2011

The American recovery is on the road to recovery, unless the mounting federal deficit slows its momentum.

A recent survey by Smart Brief and the international market research firm Ipsos of 841 financial professionals found that 67 percent think that stock prices will rise this year and that the country’s economic output will increase by 65 percent; another 59 percent said they expect unemployment to decrease slightly in the next 12 months.  The survey found that even such modest optimism is tempered by expectations of rising health care costs (88 percent); higher fuel prices (85 percent); rising prices for durable goods such as appliances, automobiles and consumer electronics (72 percent); and slightly higher interest rates (59 percent).  Additionally, 43 percent expect home prices to continue declining, while only 21 percent expect them to rebound; 34 percent expect no change.  By a margin of 70 percent – 30percent, respondents oppose allowing states to declare bankruptcy; 77 percent expect the nuclear disaster in Japan to drive greater investment and funding into renewable energy.

“Financial professionals are cautiously optimistic about economic prospects in the near term; indeed, they think that the overall scenario will improve, and they’re making business decisions on that basis, such as increased investment and hiring,” said Ipsos Managing Director Cliff Young.  “That being said, there are still concerns in the short to medium term about the increased costs of inputs such as fuel and durable goods.”

Larry Summers, former president of Harvard and architect of the Obama administration’s stimulus plan agrees, noting that “An economy in economic freefall has now recovered for 18 months,” he said.  “Make no mistake, the American economy has a feeling of normalcy that was completely absent in 2009 and that is a substantial achievement.”  Summers warned that the nation faces new challenges, including reducing the 8.9 percent unemployment rate, which he said is “far, far too high.”  He said it will be important for the US — and Massachusetts, in particular — to keep the life sciences industry strong.

To keep the recovery on track, the International Monetary Fund urged the United States to speed up efforts to slash the budget deficit.  “It is important the United States undertakes fiscal adjustment sooner rather than later,” said Carlo Cottarelli, director of the IMF Fiscal Affairs Department, the U.S. is projected to have a fiscal debt balance as a percentage of GDP of 10.8 percent in 2011, the biggest percentage among advanced countries. “Market concerns about sustainability remain subdued in the United States, but a further delay in action could be fiscally costly,” the IMF said.

According to the IMF, although most advanced economies have taken steps to tighten budget gaps, two of world’s largest economies — Japan and the United States — had delayed action to maintain their recoveries.  “Countries delaying adjustment in 2011 will face more significant challenges to meet their medium-term objectives,” the IMF warned in its updated “Fiscal Monitor” report.

House Republicans Want to Water Down Dodd-Frank Financial Reforms

Monday, March 7th, 2011

Republican congressmen searching for sizeable spending cuts are targeting Wall Street’s regulators over a plan to slash millions from the budgets of several vital agencies. They are setting their sights on the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).  The workload of both agencies is expected to increase significantly as the Dodd-Frank financial reform law is implemented. House Republicans want to slash the CFTC’s funding by $56.8 million – nearly 33 percent of the agency’s entire budget — over the next seven months.  The SEC’s funding would be cut by $25 million over the same time.

CFTC Chairman Gary Gensler said he would have no option but to reduce his staff from 680 to fewer than 440 if the cuts are approved.  “We’d have to have significant curtailment of our staff and resources,” Gensler said.  “We would not be able to police…or ensure transparent markets in futures or swaps.”  Under Dodd-Frank, the CFTC regulates the multi-trillion dollar derivatives market that includes over-the-counter products called credit default swaps.  The story is similar at the SEC, which is working to augment its enforcement of Dodd-Frank.  “It (budget cuts) will have a very real effect on the SEC’s ability, not just with respect to Dodd-Frank implementation, but also with respect to our core mission,” SEC Chairman Mary Schapiro said in testimony before Congress.

Leading the charge in Congress is Representative Randy Neugebauer, chairman of the House Financial Services Subcommittee on Oversight and Investigations. One of Neugebauer’s top priorities is assuring that regulators are not “overreaching” and moving too quickly with their new authorities under Dodd-Frank.  Neugebauer expressed concern about whether regulators are adequately performing cost-benefit analyses on every rule in Dodd-Frank, a process required under federal rule-making procedures.  He expects to call SEC Chairman Schapiro and CFTC Chairman Gensler back to testify about the issue, especially since he believes that Gensler gave him “vague” responses about cost-benefit analyses on derivatives rules.  Neugebauer said another of his major priorities will be to rein in the powers of the Consumer Financial Protection Bureau, an entity created under Dodd-Frank.  The Texas congressman wants to move the bureau to the Treasury Department and out of the Federal Reserve’s control.

Another congressional Republican makes this point.  “When the House and Senate passed the Dodd-Frank Act, supporters continually purported that small financial institutions, like many I represent, were exempt,” Representative Shelley Moore Capito, (R-WV) said.  “As the provisions of Dodd-Frank are going through the rule making process, I am starting to hear concerns from small institutions about the unintended consequences that could adversely affect them.”

One point of contention with the Republicans is the orderly liquidation provision that authorizes regulators to seize large financial institutions that are about to fail and dismantle them in a way that is less disruptive than either taxpayer bailouts or bankruptcy.

“People are saying we won’t have the guts” to invoke orderly liquidation, acknowledged Democratic Representative Barney Frank, (D-MA), who co-sponsored the legislation with now-retired Senator Christopher Dodd (D-CT).  “Well, we had the guts with regard to the TARP to get the money back.  We got it back,” he said, referencing the $700-billion Troubled Asset Relief Program (TARP) that bailed out Wall Street firms and which has been largely repaid.  “I don’t have any question that we’re going to go through with it,” Frank said.

RIP: The Iconic Pontiac

Tuesday, December 14th, 2010

RIP The Iconic Pontiac

The Pontiac – renowned for its muscle cars in the 1960s and 1970s – recently ended its 84-year run when General Motors (GM) pulled the plug on the once-iconic brand.  Pontiacs – which peaked at nearly one million sales a year in 1968 – came to an end due to a combination of bad corporate strategy and drivers’ changing tastes.  At the peak of Pontiac’s popularity, it was a favorite of young drivers because of its high horsepower models like the GTO, Trans Am and Catalina 2+2.

In the late 1980s, GM shifted its strategy on Pontiac, bringing the brand into line with its other cars.  As a result, Pontiac lost its edge.  Bill Hoglund, a retired GM executive who headed Pontiac during the days of the “We Build Excitement” ad campaign, blames the brand’s passing on a corporate reorganization led by then-CEO Roger Smith in the late 1980s.  “There was no passion for the product,” according to Hoglund.  “The product had to fit what was going on in the corporate system.”

Introduced in 1926, Pontiacs were originally aimed at working-class families who wanted reliable transportation.  A sales slump in the 1950s nearly finished the brand, but GM revitalized the cars by giving them powerful V8 engines that strongly appealed to young drivers.  Sales spiked to 17 percent of all GM cars and trucks sold in the United States in 1968.  The GTO, in particular, was a subject in popular culture and was the subject of a 1960s hit song by Ronny and the Daytonas.  The song’s chorus honored the car “C’mon and turn it on, wind it up, blow it out GTO.”