• Apr 29th 2010 at 10:00AM
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General Motors didn't use another government loan to pay off the much-celebrated $4.7 billion portion of its federal debt. According to a spokesperson with the Treasury Department cited by Bloomberg, the Detroit-based carmaker properly used funds from an escrow account to do the deed. The funds were available for the automaker to use in the event that it ran across any extraordinary expenses, but since the manufacturer decided it didn't need the money, it paid it back.
Despite the fanfare surrounding GM's repayment of a portion of its federal loans, some critics accused the company of using other government money for the payoff. Specifically, Senator Charles Grassley, the top Republican on the Senate Finance Committee, accused the automaker of performing a "TARP money shuffle" as a public relations stunt. Treasury Assistant Secretary for Financial Stability Herbert M. Allison disputed Grassley's claim in a letter on Tuesday.

[Source: Bloomberg]

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    • 1 Second Ago
      • 5 Years Ago
      OK so the Treasury, a branch of the Federal government which owns the majority of GM, says GM did nothing wrong. Good thing they investigated themselves and found themselves innocent of misrepresentation. There is no disputing that they did not use profits to pay off their debt. This is nothing more than a corporate version of you paying off one line of credit with another line of credit. I for one will never buy a GM product, they were bought out at taxpayer expense to save union jobs and union pensions.
        • 5 Years Ago
        That's WAY over-simplifying it. There's a MUCH larger picture that you are conveniently forgetting about. I'm no fan of GM either but, the country would be FAR worse off if we hadn't bailed them out.
      • 5 Years Ago
      @visconti24: "Other money, advanced to GM through TARP was converted into equity in the new GM....What is there not to understand?"

      We understand it fine, you just don't realize that you got scammed in that first part.

      • 5 Years Ago
      The escrow money wasn't GM's to spend as they pleased- they needed government approval to spend it untill the loans were wiped out. Of course it was used properly, it was always set up that the government allowed them to use the escrow money to cancel out government loans. Once they used the government escrow to pay back the loan, the were allowed to get access to the rest of the money in the escrow account.

      The government isn't doing anything legally wrong or arrogant here... GM and their advertising agency are being misleading by trying to make it look that they are paying the taxpayer back for all of the tax dollars we put in.

      Good news is current projections have us losing $28 billion on the bailout (much less than previously projected). It still makes me angry that we could have built all of the national infrastructure needed to support universal EV adoption. Too bad so many are trying to hold on to past glory rather than on building the future.

      "Under the bankruptcy arranged by Obama administration for GM last year, the automaker received $16.1 billion in an escrow account that it could spend only with approval of the Obama auto task force, along with loans from the U.S. and Canadian governments totaling $7.1 billion.

      The escrow rules required GM to use any money left in the account by June 30 toward the government loans; if they were paid off, the remainder would be GM’s to use without restriction. GM had used about $3 billion of the escrow money, and said Thursday that the payback of $4.7 billion in loans to the U.S. government and $1.1 billion to Canada allowed it unlimited access to $6.6 billion."


      • 5 Years Ago
      What are the quarterly profits(losses) of GM since they received money from the Government? Didn't they only start turning a profit again these last two quarters? I'll bet it's pretty impossible that they "paid back" all their loans from operating profits. Maybe more likely is that of the tens of billions of dollars that they were given, only a couple of billion were called a "loan", and they used the other billions and billions of dollars to pay back said "loan" because they were able to somewhat turn things around before they completely wasted all our money. Way to go GM, now we're out a little less $$ on this whole deal. Thanks and go fail already.
        • 5 Years Ago
        And how much money do you think you'll/US citizens will get back if they fail?

        Yes, it sucks that we were forced to bail out GM, but the only way for us to get our moeny back is for them to succeed. You're bitching about them taking your money, and then hoping they fail. So you don't want it back then, right?
      • 5 Years Ago
      Is this some kind of sarcasm?
        • 5 Years Ago
        @Willie: I like this one: "I really don't think youknowwhatautomaker would try to hide issues with their vehicles"...
        • 5 Years Ago
        You can bet your a** everything is political, including this stunt. Call it cynical (there is cause to be), but it is plausible this move is contrived behind closed door as a PR move to benefit both GM and the WH. GM gets to say, "see we paid off the loan" (no they haven't...they used Govt funds to pay the loan off and the govt still has 61% ownership) and the WH gets to say, "see, it's working better than expected". Who doesn't believe Whitaker's TV commercial isn't just a bit disingenuine? BS from both parties.
        • 5 Years Ago
        It never ceases to amaze me how desperate people are for GM to fail so they can score some political points against the President. This isn't a game people, this is America's future.

        I think we're seeing the true colors of a lot of people on this issue and they certainly aren't red, white and blue.
        • 5 Years Ago
        Nope, no sarcasm here - it was said by Treasury with a straight Lil' Timmy Geithner face.

        • 5 Years Ago

        How is it unpatriotic to question the validity of a government claim...especially an unlikely one like this? You don't see the coincidence that Whitacre is the head of GM? He had NO experience in the industry. Now, he finds himself in charge - appointed by his friends (not voted by shareholders). Further, what about the coincidence of the timing of this announcement? It just happens to occur as Congress sets out on a quest for financial "reform".....as if to say, "Look, everybody! With guidance by the government, we were able to repair GM." Last...the failure/success of GM is in no way the future of America. It definitely affects America, it's just not going to single-handedly going to bring America to its knees.

        Full disclosure: I have a Chevy. Its my third.
        • 5 Years Ago
        This is just another prime example of Republicans (tea party members) making stuff up and trying to pass it off as facts...I really don't think GM would have made such a fanfare about paying off the loans if they simply paid their MasterCard with their Visa.
        • 5 Years Ago
        The government (treasury) says that the government-held company (gm) paid the government (treasury) back money properly?

        What motivation would the government have to say otherwise?

        Shuffle it through enough accounts, and play enough cash-flow games, and the appearance of being clean can be touted as reality to the media.

        GM hasn't earned that much money in profit yet, since the point that they were pretty much flat broke. So that money HAS to have come from the government shuffle.

        Money launderers are envious of how well the government can do this when they make the rules for themselves, and most of the media reports it as a mouthpiece, with the tacit assumption of infallibility. There is no critical eye here from the mainstream press. They just broadcast the press releases.
      • 5 Years Ago
      Sometimes I wish AB didn't have a comments section.
        • 5 Years Ago
        No one has a gun to your head and forcing you to scroll down to read all of these comments. Or forcing you to make a comment. Don't like it? Then lead by example.
      • 5 Years Ago
      Shuffling money and lying is what caused the financial break down. People can try and spin it anyway they want to make it look right, but the bottom line is, GM didn't pay back the loan by selling cars and making a profit. Insert as much BS as you want, it's all fake.

      The bailout shouldn't have happened. Would GM and Chrysler gone under? Probably not, they would have just been sold off, instead they were just allowed to file for bankruptcy and drop a ton of debt. If anyone remembers, this is actually the 2nd time Chrysler has needed a bailout, so I have zero pity for them. The world would not crash without them. AMC went under, and most people don't even know who they are.

      I will never drive or own another GM in my life. Government can force bailouts on the American people, but the people still have the power to not buy that product. Won't get our money back? Oh boo-hoo, like we were really ever going to get it back, EVER. It was fake money that didn't exist in the first place. Debt isn't money. If you want 100% of nothing, go ahead and claim it.
      • 5 Years Ago
      I think more than the bailouts, people hate the "Spin" in the ad.
      • 5 Years Ago
      I don't see what is so hard about this.
      We gave them a bailout of money in a couple different forms.
      They paid back all of one form (the loans) and said so.

      Now the same people whining (apparently because we are not still sliding down-hill into a world-wide depression) are whining that they are getting some of (and a good size chunk actually) the bailout paid back !!??

      And they think it is underhanded !?

      I suppose it is the same people who think the reason the economy is bad is due to the stimulus spending.
        • 5 Years Ago
        "GM spinned this deal is BS and Ed Whitacre LIED to all of us about how GM Paid-back the loan in full"

        And they also lied about the MPG of the VOLT. At some point, you wonder what comes out of their mouths that's actually the truth.
      • 5 Years Ago
      Regardless of the sarcasm/namecalling/joking if the company wasn't doing better, it would have needed to keep the cash or keep the 'other' loan available for a rainy day. So it's a positive sign.

      Of course, mentioning (bragging about? humbly proclaiming?) that you've paid a loan, with interest, in advance, is going to get you some jabs...
      • 5 Years Ago
      For all the pissing and moaning that people have been doing about GM and the bailouts... how exactly does it affect you in your daily lives? Or do you make a point to get upset at something that, in all honesty, doesn't really matter?

      I mean, there's plenty of other things that the government has done to get angry about, like the countless dollars they spend WITHOUT constant media scrutiny reminding us...

      Maybe GM's just a convenient target?
        • 5 Years Ago
        It affects my investment income.
        • 5 Years Ago
        The US economy hasn't been a truly FREE market for over 100 years, but for the relative most part, YES. FREE as in free to choose what products and companies you patronize and thus pay for.

        Wal-Mart is doing what it's customers want. Offering goods at lower prices. As people lose buying power, under stagnant wages, and increasing costs, and increasing taxes... something else has to give. I don't particularly like that they run to china, either, and I tend to buy as responsibly as I can... but some things aren't made outside of china.

        The free market ALSO provides you with other places to shop, it is your choice. Patronize which businesses you choose, or choose not to buy anything.

        Until the government owns all the industries, and charges you tax money to subsidize some companies over others...

        Oh, Wait, they already do. That tax burden is NOT free. It is not a choice to direct, nor to decline.

        Do you get a discount on a GM vehicle, since you've already been leveraged to future taxation to support GM already? No. You pay roughly the same as any other car costs.

        Try something that isn't a red herring, straw-man argument.
        • 5 Years Ago
        Alex, if you don't hear it, you aren't listening. Simple as that.

        The government has no place meddling in private business. They have no constitutional role to bail out anyone.

        The new financial regulatory legislation that is going through the senate TODAY and for the next few weeks is going to codify TARP, and establish government involvement on a permanent basis.

        It was wrong before. It has been wrong for a long time. The government shouldn't have bailed anyone out.

        The free market, if it is allowed to work, conserves and re-uses resources, and bankruptcy is one of those mechanisms, to eliminate waste, and re-allocate value either to a reformed company, or to some other interest, and the value re-grows.
        • 5 Years Ago

        I love the term "free market economy". Isn't that the economy that has allowed a new Wal-Mart to be built every 10 miles, filled with cheap Chinese-made goods that Americans seem to gobble up?

        This country has very little manufacturing base left -- companies have transitioned to Mexico for production, but when that got too expensive, they transitioned to China, and now that's getting to expensive, so they'll probably transition to somewhere else in Asia. It's a shame, really, but when 'free market economy' demands this to maintain a competitive edge, it's inevitable.
        • 5 Years Ago
        The BIG issue I believe is that GM's Ed "Old Fart" Whitacre made a big deal out of "paying off this loan" when in FACT he is LYING... all they did was return unused funding....

        I do NOT appreciate it when some old fart - LIES TO MY FACE on TV claiming to do good when it was simply a fancy money shuffle.

        I have LESS RESPECT for GM today then before and will NEVER buy GM.
      • 5 Years Ago
      What isn't said is the approximate $50B GM has coming due in 2012. Currently GM's total unfunded debt is somewhere near $70B.

      GM's Marketing Department is grasping at straws and using Good Ole Ed (aw shucks) as their pitchman - "We're coming back" - has a slight odor.

      It's all about the product and although GM has come a long way, do the guys running the show have a clue.
        • 5 Years Ago
        But Ed has such a nice down home lilt to his voice! I bet he goes home at night wondering what the heck he got himself into.
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