Hundreds of car dealerships in New York are pulling out of the “Cash for Clunkers” program today citing fears that the government may not be able to properly reimburse them. The program offers up to $4,500 dollars per vehicle for customers purchasing a more fuel efficient car or truck. However the dealerships must pay the rebates out of pocket, and then must wait to be reimbursed by the government. The program has been and administrative nightmare so far, the initial funding for the program was burned through in only 4 days.

“The government needs to move the system forward and they need to start paying these dealers,” said Mark Schienberg, the group’s president. “This is a cash-dependent business.”

Schienberg said the group’s dealers have been repaid for only about 2 percent of the clunkers deals they’ve made so far.

Many dealers have said they are worried they won’t get repaid at all, while others have waited so long to get reimbursed they don’t have the cash to fund any more rebates, Schienberg said.

“The program is a great program in the sense that it’s creating a lot of floor traffic that a lot of dealers haven’t seen in a long time,” he said.

“But it’s in the hands of this enormous bureaucracy and regulatory agency,” he added. “If they don’t get out of their own way, this program is going to be a huge failure.”

The program is administered by the Department of Transportation. Transportation Secretary Ray LaHood said Wednesday that dealers will be repaid for the clunkers deals they have completed.

“I know dealers are frustrated. They’re going to get their money,” LaHood told reporters. He said the Obama administration would soon announce how much longer the $3 billion car incentive program will last.

Through early Wednesday, auto dealers have made clunkers deals worth $1.81 billion, resulting in 435,102 new car sales, according to the DOT.

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Former Treasury Secretary Hank Paulson wasn’t on Goldman Sachs’ payroll when the US government bailed out his former employer, but he may as well have been.

That’s the implication in a New York Times article, published Saturday, that shows President George W. Bush’s last treasury secretary, a former CEO of investment bank Goldman Sachs, had many conversations with the current CEO of Goldman during the week of Sept. 16, when the US government handed over $85 billion to rescue the troubled insurance giant AIG.

AIG’s outstanding debts to Goldman Sachs meant that $13 billion of the money handed over to AIG went directly to Goldman Sachs.

“During the week of the AIG bailout alone, Mr. Paulson and [Goldman Sachs CEO Lloyd] Blankfein spoke two dozen times … far more frequently than Mr. Paulson did with other Wall Street executives,” the Times reports.

The revelation is sure to fuel further claims that the $700-billion Troubled Assets Relief Program, or TARP, passed by Congress last fall with the support of both major presidential candidates, Barack Obama and John McCain, was “gamed” by Paulson in order to help out his colleagues at Goldman — and preserve his own reputation, which he made as the bank’s CEO.

Paulson spoke with Goldman’s CEO in an official capacity a total of 26 times before the treasury secretary was granted an “ethics waiver” that allowed him to be in far closer contact with his former employer than would have otherwise been allowed, Reuters notes.

In the five days after Paulson received his “waiver,” on Sept. 16, 2008, he spoke with Goldman’s Blankfein another 24 times.

But Paulson may have done more than help his former employer get bailed out of bad debts — he may have helped orchestrate the demise of his former employer’s competitors.

“Indeed, Mr. Paulson helped decide the fates of a variety of financial companies, including two longtime Goldman rivals, Bear Stearns and Lehman Brothers, before his ethics waivers were granted,” the Times writes.

Bear Stearns and Lehman Brothers — both investment banks in direct competition with Goldman Sachs — were not bailed out when bad debt forced them to cease operating last year.

“Ad hoc actions taken by Mr. Paulson and officials at the Federal Reserve, like letting Lehman fail and compensating AIG’s trading partners, continue to confound some market participants and members of Congress,” the Times notes.

From the Times article:

Goldman not only received $13 billion in taxpayer money as a result of the A.I.G. bailout, but also was given permission at the height of the crisis to convert from an investment firm to a national bank, giving it easier access to federal financing in the event it came under greater financial pressure.

Goldman also won federal debt guarantees and received $10 billion under the Troubled Asset Relief Program. It benefited further when the Securities and Exchange Commission suddenly changed its rules governing stock trading, barring investors from being able to bet against Goldman’s shares by selling them short.

While spokespeople for the Treasury and for Paulson defend the former treasury secretary’s discussions with Goldman Sachs as necessary given the financial crisis, some scholars and observers say the circumstances are suspicious.

“We don’t know what they talked about,” Samuel L. Hayes, a Harvard Business School professor emeritus, told the Times. “Obviously there was an enormous amount at stake for Goldman in whether or not the A.I.G. contracts would be made whole. So I think the burden is now on Mr. Paulson to demonstrate that there was no exchange of information one way or the other that influenced the ultimate decision of the government to essentially provide a blank check for AIG’s contracts.”

Since the $700-billion TARP bailout, Goldman Sachs has been doing very well for itself. Since several of its competitors disappeared from the market, the Wall Street investment bank has cornered the program trading market; by some accounts, half of all the automatic, computer-based trades done on the New York Stock Exchange are now carried out by Goldman Sachs.

Last fiscal quarter, the company made $100 million from stock trading on each of 46 business days — an all-time record, shattering the previous record of 34 such days, set by Goldman the previous quarter. The company has also been able to re-pay $10 billion of the cash it was handed in the bailout.

The $700-billion TARP bailout has been operating for nearly 11 months, and still has no official ethics guidelines attached to it, the Washington Times reported Saturday.

“An audit released Thursday by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP), says the Treasury Department is in the final stages of drafting rules on lobbying for bailout money – more than 10 months into the program,” the paper reported.

According to the report cited by the Washington Times, at least three of the financial institutions that applied for TARP money were granted cash despite not meeting the criteria. This, the report said, was due to “qualitative mitigating circumstances.”

WASHINGTON – The White House said Thursday it was reviewing what has turned out to be a wildly popular “cash for clunkers” program amid concerns the $1 billion budget for rebates for new auto purchases may have been exhausted in only a week.

“Cash for Clunkers may have run out of cash, but America’s consumers haven’t run out of clunkers. We’re going to work with the Obama administration to keep this wildly successful program going until it reaches its goal of helping take 1 million gas guzzlers off the road”

The decision to suspend the plan came after auto dealers warned the government today that it was in danger of losing track of how many trades had actually been made.

The plan offering owners of old cars and trucks $3,500 or $4,500 toward a new, more efficient vehicle has proven wildly popular, with 22,782 trades certified by federal officials since Monday. But the National Highway Traffic Safety Administration told dealers Wednesday that a vast majority of transactions submitted were being rejected for incomplete or illegible paperwork.

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