Obama Administration To Chrysler, GM: Sorry, You Failed. [Auto Bailout]

Obama Administration To Chrysler, GM: Sorry, You Failed. [Auto Bailout]

via Consumerist by Meg Marco on 3/30/09

In accordance with the March 31st deadline for evaluating the restructuring plans of the bailed out automakers, President Obama is expected to address the nation today to present his administration's findings — and the news isn't too sunny for the automakers.

In a 6-page PDF, the administration explained that neither company's plan was "sufficient to justify a substantial new investment of taxpayer resources," but that each company would be given a short period of additional time to fix their problems. For Chrysler, the situation is clearly more dire, as the administration's plan includes a required merger with Fiat. The two companies have 30 days to work it out in order to qualify for an additional $6 billion in loans from the government. If they can't — Chrysler is on its own.

The administration says:

General Motors: While GM's current plan is not viable, the Administration is confident that with a more fundamental restructuring, GM will emerge from this process as a stronger more competitive business. This process will include leadership changes at GM and an increased effort by the U.S. Treasury and outside advisors to assist with the company's restructuring effort. Rick Wagoner is stepping aside as Chairman and CEO. In this context, the Administration will provide GM with working capital for 60 days to develop a more aggressive restructuring plan and a credible strategy to implement such a plan. The Administration will stand behind GM's restructuring effort.

Chrysler: After extensive consultation with financial and industry experts, the Administration has reluctantly concluded that Chrysler is not viable as a stand-alone company. However, Chrysler has reached an understanding with Fiat that could be the basis of a path to viability. Fiat is prepared to transfer valuable technology to Chrysler and, after extensive consultation with the Administration, has committed to building new fuel efficient cars and engines in U.S. factories. At the same time, however, there are substantial hurdles to overcome before this deal can become a reality.

Therefore, the Administration will provide Chrysler with working capital for 30 days to conclude a definitive agreement with Fiat and secure the support of necessary stakeholders. If successful, the government will consider investing up to the additional $6 billion requested by Chrysler to help this partnership succeed. If an agreement is not reached, the government will not invest any additional taxpayer funds in Chrysler.

The administration went on to describe the process by which the car companies could be returned to viability — including offering warranty support so that consumers would feel confidant buying a automobile during the restructuring.

Meanwhile, Ousted GM CEO Rick Wagoner is trying to remain positive. "GM is a great company with a storied history. Ignore the doubters because I know it is also a company with a great future," he said in a statement.

Obama Administration New Path to Viability for GM & Chrysler [via CSPAN]

Amex Wants To Play "Scam Call" With You, Please Participate [American Express]

Amex Wants To Play "Scam Call" With You, Please Participate [American Express]

via Consumerist by Chris Walters on 3/30/09

American Express—assuming that's who Brandon called back—has apparently never heard of social engineering scams, considering how they verified Brandon's address the other night. You'd hope a credit card company would help educate its customers to be wary of giving out information over the phone, but the alleged Amex rep on the phone with Brandon demanded personal info and threatened to deactivate the card if he didn't comply.

I recently opened a charge account with American Express. I saw it as a way to not get into credit card debt and wanted the extended warranties, consumer protection, etc. that comes with the card. I had been very happy with my new Amex card, until last Friday. I was driving from my home in Dallas to Houston to visit family, and was somewhere in the middle of Texas, when at 8:45 PM, I got a call from Amex. All I hear from the guy on the line is "Hello this is so-and-so with American Express" and then my phone dropped the call (ATT). I was worried it was something serious since the call was coming in so late, fraud or something of that sort, so I called the number back. It reconnected me with Amex customer service. After going through the identification checks, I asked the woman on the line what the call had been in regards to.

She told me that Amex always called their customers within sixty days of a new account being activated to verify that they were who they said they were and they had given Amex a proper address. I was a little suprised that they were doing so at 9pm in the evening. When I said this to the woman, she seemed unphased and said it was company policy. She then told me that we needed to contact my bank to verify my address. At this point I was really shocked. "Most banks aren't open at 9pm," I said to the women. "Many bank across the country are open late on Fridays. At what bank do you have your primary account?" she responded. I told her that that I didn't really think this was necessary at 9pm in the evening while I was on the Interstate. She then told me that if I didn't verify my card, I would not be able to use it. "It'll only take three to five minutes." I relented and she called my bank, Citi.

The Amex woman put me on hold for a few minutes, and when she came back on the line, she had a woman from Citibank customer service with her. The Citibank woman had no idea what was going on. At first she also thought it was some sort of fraud situation, and seemed genuinely shocked when the Amex woman explained their address verification policy to her. After going through Citibank's lengthy phone verification process, I was told by the Amex woman that I had to ask the Citibank representative to tell me that address they had on file. At this point, I became nervous that this was some sort of fraud attempt. I demanded that the Amex representative somehow verify who she was. She could not. I then told her I was tired of going giving out my personal information on a three-way phone call, and refused to do so anymore. She then threatened to shut off my card. I relented again and asked the Citibank representative to verify my address. She did, and it was the same one Amex had on file. The Citibank representative apologized before she got off the phone for any inconvenience (they've been great since the partial-nationalization), and wished me a great weekend. At this point the conversation witht he Amex representative had gone on for over fifteen minutes. The Amex representative asked me if there was anything else she could do for me; I told her to put a note in my file to never call me again after 6PM central time unless it concerned fraud, and hung up.

Later I asked a friend who has had her Amex for three years if they had ever done this to her. They hadn't. Maybe it's some sort of new recession-era policy. Regardless, it certainly tarnished my view of American Express' supposedly sterling reputation.

(Photo: faith goble)

KFC Wants To Fix Chicago's Pot Hole Problem [Odd]

KFC Wants To Fix Chicago's Pot Hole Problem [Odd]

via Consumerist by Meg Marco on 3/30/09

Will sponsored pot holes sell chicken? KFC seems to think so. They've asked the City of Chicago if they can fix potholes — in exchange for including a white stencil saying the spot was "Re-freshed by KFC."

Despite the fact that the ads would be a "distraction and safety hazard,"— both Chicago and the State of Illinois are interested in partnering with a private company, says the Sun-Times.

Chicago certainly has its pothole problems - the Transportation Department has filled more than 250,000 street craters this winter. Department spokesman Brian Steele said the city has a lot of questions about KFC's program, like what type of asphalt is used. The city also doesn't allow ads in the public way, because they could create a distraction and safety hazard.

But Steele said the city doesn't reject the idea out of hand - Commissioner Thomas Byrne has already been looking into possible corporate sponsorship for pothole repair - and one unnamed company is a possibility.

...
"We are open to a variety of public-private opportunities and we'd be glad to discuss this one with the firm and see if it fits with Illinois requirements for quality, safety, timeliness and cost-effectiveness," said IDOT spokesman Marisa Kollias.

Wait... Illinois has "requirements for quality, safety, timeliness and cost-effectiveness?" Maybe they should ask KFC if they want to buy some parking meters, too.

KFC wants to sponsor pothole repairs [Sun-Times]

FICO Confirms: Reduced Credit Lines For Good Borrowers [Credit]

FICO Confirms: Reduced Credit Lines For Good Borrowers [Credit]

via Consumerist by Carey on 3/29/09

A study from Fair Isaac confirms that even the best borrowers are seeing their credit lines slashed as banks move to boost profitability during the recession. 16% of Americans have seen their credit lines reduced by an average of $2,200, and of them, 11% had no late payments or negative marks on their credit report.

That may come as a surprise to those consumers because they pay off their balances every month and are careful with their credit, says John Ulzheimer of Credit.com. But at the same time, those customers are also generally less profitable for lenders, he says.

Typically, credit scores tend to remain relatively stable over time, in part because there are a number of factors that go into calculating one's score. In fact, the banks' tightening may have spurred some consumers to pay down balances more quickly. Among Fair Isaac's findings: About 6% of consumers saw their scores jump by 40 points or more (about 4% saw their scores drop by 40 points or more).

So there you have it, straight from the source. It's not your fault, and you did nothing wrong. You were just too unprofitable for the banks, just the way you should be.

Credit Cuts Befall Even Top Scorers [The Wall Street Journal]
(Photo: yksin)

Now Is A Good Time To Haggle Over A TV [Buying]

Now Is A Good Time To Haggle Over A TV [Buying]

via Consumerist by Carey on 3/29/09

Between weak holiday sales and the pending arrival of new models, this an excellent time to haggle with your local electronics store over the price of a new TV. In a normal year, prices dip before the holidays and again before the Super Bowl. This year, with the recession clamping down on bank accounts, nobody's buying. With new models arriving soon, retailers just want to clear out their showroom space, meaning you can walk in and save a few hundred dollars on that dream set you've always wanted.

"Retailers and manufacturers will make every effort to move out the older models before the new ones arrive," Gagnon said. "When there are new models out there, that's what people want."

In a normal year. A sparkling new TV, with the latest whiz-bang bells and whistles, is great fun to have. But given the uncertainty of the times, a bargain on last year's gadgetry is just fine for many of us.

[...]

Although prices are good now, a major bargain might not last long, Gagnon said. That's because when it comes to consumer pricing, the recession is a two-edged sword.

Prices remain good to help get rid of inventory. But the recession also means that inventory is thin and manufacturers and retailers are less able to offer blowout specials. "You're not as likely to see the 0% financing promotions of years past," Gagnon said.

Before heading out, read through our haggling tips to help land the best deal.

It's prime time for buying a TV [The Los Angeles Times]
(Photo: Gilgongo)