TEXT OF INTERVIEW
Steve Chiotakis: Can you believe Thanksgiving is next week? And ’tis the season when millions of us will be devouring some plump, juicy turkey.
Fortune Magazine’s Allan Sloan is looking at some turkeys of his own — or as we like to call ’em, “foul” business dealings. Topping his list? The popular “Cash for Clunkers” program. He’s with us now to talk about that and some other economic failures, in his opinion, of the past year. Good morning, Allan.
Allan Sloan: Good morning, Steve.
Chiotakis: All right, Cash for Clunkers. I mean, I thought, Allan, this brought people into the dealerships, I mean got ’em buying when they had no incentive to do so before. Are you saying it’s a dud?
Sloan: Yeah. Because even though it did in fact increase sales while the program was on, it’s decreased sales that would be happening now. Also, the used car market lost a whole lot of low-end used cars, which increases the price to the people who shop in that market, who are the lower income people, who are the people we’re trying to help.
Chiotakis: All right, next turkey is Citibank and Fibro. I mean, if the U.S. government, i.e. the American taxpayer, owns 34 percent of Citi, right, these are bankers — why didn’t they know better?
Sloan: They sold Fibro energy trading business for a billion dollars under pressure from the government, and they could have easily gotten $1.5 billion probably more if they had been able to sell it freely instead of under the gun. And the reason they sold it, as I’m sure you remember, is that they were going to have to pay some of the people there so much money under their contracts that it would have brough afowl — you should forgive the expression — of the pay czar.
Chiotakis: All right, next turkey is TARP, right, these warrants.
Sloan: Right. The government got a piece of the action when it made TARP loans to banks. But under the rules, banks have the right ot buy back their piece of the action, which are known as stock purchase warrants, when they repay TARP. So most of the government’s warrants got sold very, very early when the stocks of these banks was only starting to rise. And had they waited, we would have gotten a better price.
Chiotakis: What about future turkeys? More, or fewer turkeys in the future, Allan?
Sloan: Always more turkeys. Always more turkeys. You look around and there’s a ton of cheap money now in the world and some deals are starting to get done. The government is holding interest rates too low, it’s tryign to inflate the housing prices again. All of this is producing poults — which are baby turkeys, to those of us who didn’t grow up on farms — and I am sure that next year or the year after, we will have, in time for Thanksgiving, another whole new batch of turkeys.
Chiotakis: Fortune Magazine’s Allan Sloan joining us this morning. Allan, thanks.
Sloan: You’re welcome, Steve.
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