Fast Harley-Davidson News

Harley-Davidson Bailout. This week American people learned the incredible details of the Fall of 2008 Fed’s 3 trillion dollars bailout of Wall Street and of Corporate America. Not only, the Fed lending almost daily to the largest US banks but also to foreign ones, but to companies like GE, Verizon, Harley-davidson and many others. The Fed justifies its actions because the economic situation was much worse that what was stated to us with credit frozen across all the financial system, including the commercial paper. To avoid an international panic the Fed lowered its standard for the kind of collateral it accepts, accepting assets carrying a greater risk of default. Among other disclosures, we learned that to help Harley-Davidson finance its daily activities the Fed lent money to the company a total of 33 times in 2008 and 2009 for a total amount of $2.3 billion.  

Harley-Davidson In Brazil. The company will expand its dealer network in Brazil and reached an agreement with HDSP/Grupo Izzo, its exclusive dealer in the country already operating nine retail outlets.  That will allow Harley to appoint new retailers in the future. Recently, Harley opened an office in Sao Paulo. The company has a factory in Manaus, Brazil, where since 1999 it has assembled motorcycles for the sale in that country. Harley has sold heavyweight bikes in Brazil since 1993. Harley’s motorcycle sales in the U.S., its largest market, dropped 37 percent to $2.91 billion last year from 2006, hurt by the recession. The company, which had total motorcycle sales of $4.29 billion in 2009, doesn’t report a breakdown of revenue from Brazil or the Latin America region.

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9 Responses to “Fast Harley-Davidson News”


  1. 1 burnout Dec 4th, 2010 at 8:40 am

    2.3 BILL-YUN ! woo hoo! “The problem with liberalism is eventually you run out of other peoples money” peace

  2. 2 martin Twofeather Dec 4th, 2010 at 9:13 am

    burn-out look under the Bush admin they approved it………peace

  3. 3 ben Dec 4th, 2010 at 10:39 am

    Looks like I should stop payment on my Harley, I already paid for it once…. $2.3 Billion, that’s over 120,000 bikes at an average of 18k per bike….

  4. 4 Doc Robinson Dec 4th, 2010 at 3:31 pm

    Hey Ben and Burnout, you went off half-cocked guys. And Cyril, I must add that your baillout story is somewhat disingenuous to say the least, given the Harley-haters that infest this blog. The reality is that H-D paid it back – with interest.

    “According to documents released by the U.S. Federal Reserve, Harley-Davidson received short term loans totaling $2.3 billion in the midst of the financial crisis. The central bank purchased commercial papers from Harley-Davidson 33 times from Oct. 27, 2008 to Feb. 11, 2009 as part of the Federal Reserve’s Commercial Paper Funding Facility (CPFF).

    Commercial paper is a form of short term promissory note issued by banks and corporations to help fund daily activities, such as meeting payroll and paying suppliers. The market for commercial paper market essentially froze in September 2008 after the collapse of Lehman Brothers.

    The Federal Reserve formed the CPFF to help companies maintain liquidity by purchasing three-month commercial paper. Commercial paper was purchased from banks and insurers as well as companies such as Harley-Davidson, McDonalds, Verizon and General Electric. The largest purchases were with financial services company UBS ($74.5 billion), insurance corporation AIG ($60.2 billion) and financial institution Dexia ($53.5 billion).

    All commercial paper purchased by the CPFF was repaid, with interest, by May 2009 including all of Harley-Davidson’s. In all, the CPFF earned $6.1 billion in interest and usage fees.”

  5. 5 fredp Dec 4th, 2010 at 9:31 pm

    And why H-d gets billions? Not Big Dog, Titan, Big Bear, Am. Ironhorse, etc? There were a lot of vendors hooked into these guys when GE pulled the plug on their finanacial needs to their dealer network.
    It’s not who you know, it’s who you Bl… I guess.

  6. 6 David Dec 4th, 2010 at 11:12 pm

    Martin Twofeather…It was Nancy Pelosi and the Liberal left Democrats that had a hold of the purse strings not conservatives even though Bush was there(why not read his new book).
    I wish people would stop blaming Bush(why hasn’t Obama stopped the bleeding). It’s just as easy to say No as it is to say Yes or is it ?And who do you have advising you and feeding you info and who are behind those people and from whom are those people getting their intell (or pockets filled with cash). You cant just blame one guy when there are thousands invovled.
    When is H-D paying back all these loans that the tax payers funded? Hell at least we knew about some of the banks and GM. What other UNION SCUMSUCKERS were putting money in their pockets ! Why are we paying for companies to expand globally???
    Usually if you can’t pay you bills and nobody wants your product and you can’t borrow to get you through you can declare bankruptcy or close down none producing markets and reorganize or just plain go out of business.
    I say nobody is to big to fail….We seem to be able to take care of the rest of the world surely we could draw back and take care of our own Neighbors until everybody back on their feet from some setbacks and I’m not talking about the Govt giving another 99 weeks on unemployment !!!

    SSDD; David

  7. 7 Grayhawk Dec 5th, 2010 at 9:35 am

    Harley as a normal business practice like most business’s of size that afforded customers the ability to finance big ticket purchases were daily/quarterly, etc. getting short term loans to allow them to secure the financing of bikes thru their HDFS financing arm and did so based on secure asset backed loan basis’s among others.
    When it all dried up, normal asset backed secured bank loans, no business of size could continue doing daily operations without the continued cycle of loan security availability. Short version when the money is flowing all was good when it stopped business’s across the board came to a sketching halt and all the Ben’s and others of the world unless they could pay cash could not / would not have been able to finance a bike.

    Having said that the only way Ben, “noting I only reference Ben in response to his comment above”, and other tax payers would be paying for Ben’s bike would be if all/enough of the guys/gals who financed their big ticket item thru HDFS would default on their loan to the extent Harley could not pay back the loans. Which I believe the same article this posting may be based also acknowledged Harley did pay back. Same principal applies to all the motorsports industries.

    All the FED did, again in my opinion, was to say to banks/businesses we will set up these programs, about 13 of them, that will act as guarantor up to (x) percentage of (x) loans you let/lend then if they default we cover up to 70% of the default thus loosening the banks death grip on money lending to qualified businesses. This some say did keep money flowing to some extent for corporations who took advantage of the access to funding backing.

    Harley /other businesses paid them, the loans, back as they would their normal operating loans most by year end 2009. So did many of the companies listed above as well as Ford, Honda Motor Company, hundreds of others. Businesses of size cannot and have not for the most part ever operated without the ability to borrow as they go. Investors love it because they make money off the interest and money is in motion. All this is not so different than SBA loan programs that have been afforded smaller businesses for decades.

    Many qualifying Automotive, RV, Motorcycles, Boats, etc., etc. businesses that normally secured their big ticket item financing sought out and qualified for TAF, TALF, other programs under the umbrella of the CPFF and other programs, many that is that were aware of the programs and qualified for same.

    TALF in short version were FED backed programs where the FED set-up LLC’s for banks etc. to guarantee loans to businesses when banks were otherwise not lending to anyone without some guarantor of sort.

    CPFF: Excerpt
    Commercial Paper Funding Facility, which was used to provide liquidity to U.S. issuers of commercial paper in the event that credit was not available in the market, according to the Fed. By providing liquidity to the commercial paper market, the CPFF encouraged investors to resume lending in the market.
    The Fed described the program this way: “Under the program, the Federal Reserve Bank of New York provided three-month loans to the CPFF LLC, a specially created limited liability company that used the funds to purchase commercial paper directly from eligible issuers. The commercial paper that was eligible for purchase was highly rated, U.S. dollar-denominated, unsecured and asset-backed commercial paper with a three-month maturity.”

    Excerpt:

    The Federal Reserve released data on its Web site Dec. 1 detailing more than 21,000 transactions spread over 13 Federal Reserve-backed programs used between Dec. 1, 2007 and July 21, 2010 to shore up the financial system amid the banking crisis.
    Among those programs was the Commercial Paper Funding Facility, which was used to provide liquidity to U.S. issuers of commercial paper in the event that credit was not available in the market, according to the Fed. By providing liquidity to the commercial paper market, the CPFF encouraged investors to resume lending in the market.
    The Fed described the program this way: “Under the program, the Federal Reserve Bank of New York provided three-month loans to the CPFF LLC, a specially created limited liability company that used the funds to purchase commercial paper directly from eligible issuers. The commercial paper that was eligible for purchase was highly rated, U.S. dollar-denominated, unsecured and asset-backed commercial paper with a three-month maturity.”
    More than 1,100 transactions for a total of $738 million took place under that program.

    Another couple of programs Excerpts:

    1. Another among those programs was the Term Auction Facility, which was tapped by banks worldwide to have access to capital.
    Under the program, the Federal Reserve auctioned 28-day loans, and, beginning in August 2008, 84-day loans, to depository institutions in generally sound financial condition. The TAF enabled the Federal Reserve to provide term funds to a broader range of counterparties and against a broader range of collateral than it could through open market operations.
    As a result, the TAF helped promote the distribution of liquidity when unsecured bank funding markets were under stress. It also provided access to term credit without the stigma that had been associated with use of the discount window.

    2. TALF LLC (the “LLC”), a Special-Purpose Vehicle consolidated by the Federal Reserve Bank of New York (“FRBNY” or “Managing Member”), is a single member Delaware limited liability company that was formed on February 4, 2009 in connection with the implementation of the Term Asset-Backed Securities Loan Facility (the “TALF program”). The LLC was established for the limited purpose of purchasing (a) any asset-backed securities (“ABS”) and commercial mortgage-backed securities (“CMBS”) that might be surrendered to FRBNY by borrowers under the TALF program as described in more detail below or (b) in certain limited circumstances, TALF program loans. FRBNY is the sole and managing member of the LLC. FRBNY is the controlling party of the assets of the LLC and will remain as such as long as its loan commitment and/or its loan is outstanding.

    Thus in my opinion although all businesses and individuals most notably in regards to this industry were not afforded, or didn’t have the secure assets to qualify or weren’t aware of the programs or just did not qualify for these programs; many in the industry did benefit or there would have been an even bigger hit across the board to many on this blog.

    Fully noting none of this extended nor excused the bad practice of poor business/poor government entitling practices by many, nor the letting of subprime loans and the willingness of Joe “customer” Treadwater to sign his name on the dotted line of big ticket items he couldn’t afford/ nor sustain which got us into the deep end of the pond in the first place.

  8. 8 David Dec 6th, 2010 at 1:26 am

    Grayhawk that was a great description and analogy. Although probably a bit breif do to space contrainants and it just goes to show you why the system failed because Johnny Banker or Broker or Accountant sitting in the backroom or front office on Wall Street can cook up some scheme he thinks will put money in his or his company’s pocket and therefore lures Joe Blow into a false security and them pulls the rug out from under him and the whole system goes belly-up.
    Then there are the Unions not unlike the Govt that have over burdened the system making promises they could never keep(Pensions,retirements and medicare,medicade,and social security) just so they could line their pockets and live off the backs of their members or constituants.
    Now we have a liberal left govt in place and it’s members are unwilling to do the hard thing like saying NO because they wont get reelected and be able to live off the hind tit of John Q. Public.
    Have you guys ever gone and looked at the bills and laws they pass just to hear themselves talk or build some dumb turttle tunnel somewhere in their district. Gee I just get sick thinking about it all.
    We need to get rid of all the jerks and get people in there that want to SERVE and not make a life out of politics(get in do the job and get out) and go on with their lives.
    What the Hell has Charlie Rangle really done for Harlem? OR was his gain on their backs as well as ours. Any one in his place and education should know to hire an accountant to inform you of your financial needs if his intentions were honorable. I Dont Know just does not cut it there at that level.

    SSDD; David

  9. 9 Grayhawk Dec 6th, 2010 at 10:24 am

    David

    Yea just threw in a few excerpts from the governments own books which show the what an how.

    Its whats not in formal print that is most concerning as one can follow the print of formal programs;

    Having said that the presentations by the talking heads and their ability to flavor for/to the publics gullable pallet consumption is what is scary.

    For one, Remember pay as you go that was preached during the elections, well seems they forgot to note the loopholes that exempted discretionary spending, believe someone said that little portion was about 38% of spending and not to be left out; emergency spending so from your points there David no matter the political seat its spending and until it is controlled and/or cut back it ain’t going to get better.

    Its also all smoke an mirrors when it comes to some states, look at Illionis and California who have and continue to write checks they expect other states to make good, and the government who continues to print of money we have yet to borrow and get obiligated for in many more ways than literal debt repayment. Not to mention we’re going to up our anty to the IMF, if we’re going to borrow it from China and Japan and Saudi to have the funds to do so just let them, C/J/S contribute directly to the IMF, only think worse than paying for something once is paying for it twice, Talk about giving away the farm.

    Sorry back to the point:

    Good sound honest businesses and individuals usually pay back their debts and as such the lending cycle that allows investors to profit from extending capital to same is not a bad thing its just like everything else it has to be manageable and within a workable profitable/individual and/or business plan.

    Governments ours especially should be no different in that balance sheets balance.

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