In new information just released by the Federal Reserve, starting in the Fall of 2008, the Fed was giving aid to a wide range of banks and businesses, including foreign banks and businesses, which might raise a few eyebrows, while at the same time, a lot of US domestic companies were receiving assistance as well, something which didn’t receive much, if any, attention at all.
One of those companies, Harley Davidson, received a total of $2.3 billion in the form of short term loans, as the Fed, acting as lender of last resort, purchased commercial paper 33 times, beginning in October of 2008 and continuing through February 2009. Commercial paper is a form of short term debt used by corporations to fund daily activities.
This is an indication of Harley’s financial situation during the worst of the credit crisis and these purchases by the Fed may have saved the Motor Company from much worse.
Link: Washington Post
Link: Federal Reserve — Fed Excel data sheet
akaaccount says
ohhhhhhh boy this could get ugly
Tinman says
The good news is these notes were repaid in full !! Unlike the funds given to the banking industry. This was not a gift, it was a series of short term loans used to get past the credit meltdown in the financial secture.
HoughMade says
I’m with Tinman. I think it was a smart move to extend credit to companies to get them past a time when banks were refusing to extend credit due to their own problems. Many companies need short term financing, even when times are not dire due to the simple timing of income and the need to make payments at a certain time. When you combine that with a dire situation and banks unwilling to lend, what could very well be a viable company can be stopped cold…permanently. To allow a viable company to survive until banks started lending was a good thing for the U.S. economy overall.
BobG says
Tinman 12.02.10 at 12:45 pm
“The good news is these notes were repaid in full !! Unlike the funds given to the banking industry. This was not a gift, it was a series of short term loans used to get past the credit meltdown in the financial secture.”
HoughMade 12.02.10 at 1:03 pm
“I’m with Tinman. I think it was a smart move to extend credit to companies to get them past a time when banks were refusing to extend credit due to their own problems. Many companies need short term financing, even when times are not dire due to the simple timing of income and the need to make payments at a certain time. When you combine that with a dire situation and banks unwilling to lend, what could very well be a viable company can be stopped cold…permanently. To allow a viable company to survive until banks started lending was a good thing for the U.S. economy overall.”
Ditto. On the money! (no pun intended)
BobG says
Harley, McDonald’s used emergency federal aid
By JEANNINE AVERSA
Associated Press
Updated: 12/02/2010 11:27:42 AM EST
WASHINGTON – The Federal Reserve revealed details Wednesday of trillions of dollars in emergency aid it provided to U.S. and foreign banks during the financial crisis.
Non-bank companies also received aid, including Harley-Davidson and McDonald’s.
Harley borrowed the funds primarily to finance Harley Davidson Financial Services, the company’s arm that offers loans to motorcycle buyers, said spokesman Bob Klein.
Companies such as Harley traditionally take out short-term loans when they need liquid assets. During the economic downturn, much of that funding vanished and companies turned to a federal government program for their cash.
Harley, for example, borrows money from private sector lenders nearly on a daily basis, Klein said. When the federal program became available, the company borrowed as much as $1.5 billion between October 2008 and February 2009, Klein said.
Harley paid back the loans by mid-2009, Klein said.
Similarly, Caterpillar Inc. borrowed $733 million and McDonald’s $203 million.
Harley’s plant in Springettsbury Township is undergoing a major restructuring, which has involved paring the number of employees from 1,950 union workers to about 700 to 800 full-time, union production workers. Production is being shifted from more than 40 buildings to an expanded version of what used to be the Softail plant.
A similar restructuring is underway at Harley’s facilities in Wisconsin. In November, the company announced plans to examine inefficiencies at its operations in Kansas City to see if similar moves are needed there.
Newly released documents show that the most loan money over time went to Citigroup ($2.2 trillion), followed by Merrill Lynch ($2.1 trillion), Morgan Stanley ($2 trillion), Bank of America ($1.1 trillion), Bear Stearns ($960 billion), Goldman Sachs ($620 billion), JPMorgan Chase ($260 billion) and Wells Fargo ($150 billion). Many of the individual loans they took were worth billions and had short durations but were paid back and renewed many times.
Merrill Lynch was later acquired by Bank of America, while Bear Stearns collapsed and was sold to JPMorgan.
Among the largest foreign bank recipients were Bank of England, Swiss National Bank, Barclays and Bank of Japan.
The documents from the Federal Reserve are a reminder of how crippled the financial system had become during the crisis and how much it’s recovered since. Banks earned $14 billion from July through September this year.
The whole story – just so nobody gets their knickers in a fluff.
FREEMAN says
@ BobG: yeah I agree. I don’t know what it is about Harley (maybe because it’s an American company), but way too many people get bent out of shape about any news about them. HD is a business first and foremost and like any other business it is trying to survive like everyone else while times are rough. I know there’s readers/business owners on this forum that can relate to this.
kim says
Saw the headline and thought “oh f*** me backwards, wikileaks takes on corporate business”.
woodco100 says
I HD cannot loan money to potential customer, it cannot sell bikes.
As long as it was a temp situation and they paid it back, it seems like good business.
Tom says
Socialism for the rich. Social Darwinism for everyone else.
Chris R says
I don’t fault Harley for taking advantage of government loans. But as a small business owner, I don’t get this benefit, only constant harassment from the government and the banks if I am a day late on a loan or a tax payment. However, we have survived without government help, so I guess we have better management skills than the big corporations that are too big to fail.
FREEMAN says
@ Chris R: Even business owners aside, I’m pretty sure everyone gets harassed for not paying their bills or taxes on time.
HoughMade says
I’m one of the owners of a small business as well. No, my business did not have access to this money, but my personal knowledge of the need for short term financing and knowing just how hard it was to get in late 2008, I understand why the credit was extended and how important it was. We had a line of credit in place that helped us through, otherwise, I may not be saying that I own anything today.
Some call this welfare, but I am unaware of any welfare recipient who ever paid it back with interest at a market rate….and kept thousands employed with the money.
den says
I hope it is not this bad but… read “The History of the Decline and Fall of the Roman Empire” by Edward Gibbon
Penectomy says
The headline and article are meant to mislead to draw a conclusion that is/was not true. Toyota, BMW, Ford and Mitsubishi also took advantage of this federal program. This was not a bailout akin to the GM aid.
kneeslider says
Penectomy, the headline and article report what happened. If you read the article, nothing more was implied other than what actually happened. Anything else you see or read into it is what you wanted to see. It didn’t say anything about GM, it did not use the word bailout.
The Fed’s actions were not known until today and since this is a motorcycle website and Harley is a rather large US motorcycle company, the story is newsworthy.
Peter says
Tinman, the banks have all paid back their “bailout” and associated loans. It is only AIG, GM, Chrysler, and perhaps Fanny and Freddy who haven’t paid back all the government funds.
Seymour says
Wait a minute… Didn’t Warren Buffett also lend Harley a bunch of money around the same time?? If so, how does that figure in?
Lowrider88 says
TOM…”Socialism for the rich. Social Darwinism for everyone else.”
Right on! Is there anything in the Constitution that allows the government to be a commercial bank?
Wake up fellow Americans, you are getting screwed by your own government. Don’t worry about the Russians or Chinese, worry about about Washington, D.C.!!!
Jim says
LoL, so much for rugged individualism.
Frustrated says
All you people that continue to support the almighty HD. The product is mediocre at best. Production is being moved to good old India. So much for the All American motorcycle and keeping Americans employed!
I fail to understand how the American public is so easily taken in by our politicians and hype and marketing from the likes of HD,TV shows and personalities. Our country as a whole really needs to wake up!
FREEMAN says
@ Frustrated: why not support HD? Harley is a huge motorcycle munfacturer that employs around 10,000 people. Would you rather people were unemployed?
About India, I believe that was to get past import tariffs to sell bikes in India. Look at it this way, now there’s jobs for people there too. How is that a bad thing? As far as I know, they are not outsourcing, but expanding.
As far as the product goes, I can’t tell you because I don’t own one. There are many out there that love them. To each his own.
Tom says
I own a 2009 HD Ultra Classic that’s been in the shop more than any other bike I’ve ever owned. I’ve been conversing with other Harley owners on various forums and the general consensus is that Harley’s quality is going downhill. If they started making bikes with at least the same quality as the Asian competitors (like they started doing back in the early 80’s as part of an HD revitalization) then they’d sell more bikes and not need to borrow as much, or perhaps no money. I am extremely disappointed with Harley’s quality of workmanship, products and dealer customer service… well, that simply sucks. Soon as I can afford to do so, I am switching back over to a big Asian bagger like the Kawasaki Voyager. I gave American Made a shot and the product is nowhere near my high level of standards. When I am paying $20K+ for a bike, the damned thing had better be of exceptional quality; especially when the aforementioned Kawasaki sells for about $6K less.
aaron says
hi, can we have some money? after buying mv agusta, paying their debts, and developing an all new product lineup, we want to give the original owner a crapload of money to take it all back… oh, we also want to shut down buell, and we need more cash to lend to people that can’t afford our bikes…
Kevin says
I am not against the government helping out these American companies. I would rather the government keep our big businesses alive then let them die and leave hundreds of thousands of people unemployed. Even if it isn’t in the constitution I believe it is the best thing to do.
What I don’t agree with is the fact that the aid given to domestic brands is loans while the aid given to foreign businesses is free money. They hand it out to foreign companies but expect ours to repay.
I am glad HD payed the loan back. And to the comments above, so did GM. I don’t know if Chrysler has paid it all back yet.
steve w says
Some people are cry babies. Some are just HD haters. Some would rather give money to foriegn owned companies than support companies that have thier headquarters on these shores. The way this crisis hit everyone was looking for money as companies that had great bottom lines still had the money availabilty to operate taken away at a moments notice. They are surviving and that is what is key. In some areas quality is up. In other mechanical areas is quality is down. As a whole it is still a very good motorcycle company. For those that don’t like HD styling or think the product is just not up to standards just go away and buy what you want. Your not needed anyway. It may not be what you are looking for in a motorcycle. That is why there is more than one brand.
Tom says
Hey steve, we do go away but we want to buy an American brand that doesn’t suck. We want America to be better while you’re ok with us making crap. Hardly a patriotic position you’re taking.
rohorn says
“I’ve been conversing with other Harley owners on various forums and the general consensus is…”
The consensus is that you don’t have a Harley, that you don’t have many or any offline friends, and that you spend too little time in the real world. And that’s assuming you haven’t reached the age of emancipation and/or aren’t incarcerated.
Randy says
We should not continue to bail out company’s that make bad business desisions. But it is all about power and money
Tinman says
Why oh Why do so many on the Net hate Harley?? Ive had 2 new HDs and neither had ANY warrenty issues. The fit and finish is second to none, and the reliability is bulletproof. Just because some folks dont like cruisers, or are anti Union they need to make up stories and rely on hearsay to despairage the brand. Face it folks HD is here to stay and is still the Gold standard that all cruisers are judged against.
Tom says
Why oh Why do so many on the Net hate Harley??
Its 2010 and you still ask this question????? The reasons why are legion and well documented. Its not the bikes themselves but more the “people” and cult that surrounds them. Being lied to is more of a problem than an inferior motorcycle. Royal Enfield is just as bad, if not worse, than a Harley but does not engender such hatred. Obviously, its more than the machine itself.
As for thinking that Harley is the gold standard and will stay forever, Pierce-Arrow was the gold standard of cars. Duesenberg was the gold standard of cars. Packard was the gold standard of cars. Indian was the gold standard of motorcycles. Henderson was the gold standard of motorcycles. Brough Superior was the gold stand…….. I could easily go on but perhaps I should let the new Roman emperor speak for me. Oh, right….
steve w says
Now it’s the people not just the bikes. I ride 2 V twins and only one is a Harley. The other 2 are customs i built. I ride what I like and don’t look the part. No Tat’s, no beard or long hair and I don’t drink and ride. Am I a problem? If I had a Honda they wouldn’t like me either ( had a bunch of them) because I don’t walk to the beat of anyone but me. I am the odd duck out. Way to much motorcycle knowledge for most people and way to unassuming and don’t really look the part. for those that think that Harley’s don’t have it, learn to pull wrenches and make the bike talk to you. some will say I don’t want to build it I want to buy it but even if I went and bought a new Ducati I would still change it to make it better. I just like the HD as a platform to build from so long live HD and yes I wish for many of you they did offer some other styles and packages. As for HD maybe thinking they can’t build a competitive Sport bike unless it is a world beater they need to only look no further than Triumph.
aaron says
@tom – “I should let the new Roman emperor speak for me. Oh, right….”
dammit, now I’ve got coffee up my sinus. awesome quote though, I can’t remember the last time I had a mishap from laughing so hard.
@steve w – “I just like the HD as a platform to build from so long live HD”
I think steve may have just hit on a serious headache for harley in the future. Imagine if a competitor (I’m thinking S&S in particular) were to offer bare bikes for people who are currently buying a stock harley and discarding thousands of bucks worth of bodywork, lighting, exhaust just to get to the point where they have a base upon which to build. throw in the difference in price you’d end up paying to get a twin cam motor up to x-wedge power levels, and you see the appeal. I’m not thinking of a kit bike, this is a complete road legal runner… just without all the crap that gets replaced in the first place. if the DMV requires, it could be sold with this stuff, but buyers pay a refundable deposit instead of buying it outright.
steve w says
@ Aaron, I think you might have found me. I am 27 miles from so called place and where I don’t believe S&S will ever do that, you might now know how much power my bikes have and why I smile and like the HD platform. Yes you can hustle a correctly built V twin quite well. I also own the pretty little blue Triumph Streetracker that was on here a year or so ago. (search)
Tinman says
Did you guys miss the news reported here a while back?? Starting this spring you can order a Sportster built the way you want it, This is something we all have been looking for and HD is the 1st mainstream maker to bring it on. Look it up, the Info is out there.
Azmiike says
Any business which cannot pays its bills from its profits does not deserve to survive. Ask any small business person who has been down this road. This sucking from the tit of goverment largesse just encourages inefficient and sloppy business practices. Which lead to inefficient and sloppy products. Which is where Harley Davidson is today.