Though Ford Motor Co. has said it could continue to operate without government backing through 2009, it seems that Ford Credit may not.
Ford Credit lost $1.5 billion last year, compared with earnings of $775 million in 2007. At yearend, it had $21 billion of liquidity available for use, down from $25 billion as of Sept. 30. And the captive will shed 20% of its workforce by midyear.
Ford Credit has renewed efforts to gain approval for an industrial loan charter, a move that would provide it with access to cheaper government funds. Ford Credit initially applied for an ILC charter Feb. 1, 2008, the day after the Federal Deposit Insurance Corp. resumed taking applications after a two-year hiatus. ILC status would enable Ford Credit to issue debt guaranteed by the FDIC and borrow funds at cheaper rates.
I bet the government will finally approve Ford Credit’s ILC application, considering it fast-tracked GMAC’s bank-holding-company charter late last year and has granted Chrysler Financial $1.5 billion of funds. My prediction: The FDIC will greenlight Ford Credit’s ILC by the end of March.