This is just too much…
Sen. Bob Casey Jr. (D- Penn) has asked a federal agency to find Harley-Davidson (HOG) eligible for funds handed out under a federal bailout for financial institutions. In a Jan. 16 letter to Federal Deposit Insurance Corp. chairman Sheila Blair, saying Harley-Davidson recently inquired whether its financing company and subsidiaries — Harley-Davidson Credit Corp. and Eaglemark Savings Bank — are eligible for the Temporary Liquidity Guarantee Program, or TLGP.
“Without access to TLGP, Harley-Davidson may be forced to make tough decisions that will impact workers in Pennsylvania, jeopardize the local economy … and negatively impact the state economy,” Casey wrote in the letter. Casey said he wants to do everything possible to make sure Harley’s financial arm has access to help if it’s eligible.
He said the problem with the economy is related to credit, and Harley’s participation in the program would allow more people to get Harley loans to buy motorcycles. “Without the determination (of eligibility) made, it puts their financing company in a much more precarious situation,” he said.
In October, in an attempt to improve confidence in the banking sector and to improve liquidity for banks, the FDIC started the program to guarantee newly issued unsecured debt of qualifying institutions and guarantee certain noninterest-bearing accounts.
Guarantee debt: Harley spokesman Bob Klein said the program would guarantee unsecured corporate debt against default; Harley would only get federal funds if a customer defaulted on his or her motorcycle loan.
Klein said the TLGP is one of several options that Harley-Davidson’s financial arm is pursuing “to ensure continued funding of its lending activities” in a challenging economic environment. Lower consumer confidence has affected the motorcycle industry, he said.
The Wisconsin-based company told elected officials in Pennsylvania and Wisconsin about its plans to seek inclusion in the program, Klein said. The company appreciates Casey’s support, he said.
A recent dealer survey shows that year-over-year retail sales appear to have softened from the third quarter, when Harley-Davidson reported a 15.5 percent drop in U.S. retail sales. The company is expected to report fourth-quarter results Friday.
Now, this is government programs run amok. It is one thing to backstop the debt of the compnay to lower borrowing costs, but to backstop its customers? Insane…
Do we really expect corporations to increase lending standards in an effort to avoid another fiasco like we are going through when taxpayers are backing the loans they are making now? Do we really?
What’s next, guaranteeing the debt we use for dishwashers at Home Depot (HD) or Sears (SHLD)?
Disclosure (“none” means no position):
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