Free Markets, Free People

GM’s claimed debt repayment

You may have seen the announcement yesterday by GM’s CEO that it was paying back a portion of the money it had been loaned by the taxpayers (who borrowed it to loan it) to keep the company from going under and providing it the room for the government to own 61%.

The White House was exultant:

No one was cheering louder than the White House about General Motors’ repayment of $6.7 billion in loans from the federal government.

 First thing this morning, Press Secretary Robert Gibbs alerted his 56,000 followers on Twitter of “BIG NEWS.”:”GM pays back US $6.7 billion used to save jobs,” Gibbs exulted. But he had more.

 “BIGGER NEWS,” he trumpeted. “Payment was 5 years ahead of schedule.”

Uh, not so fast.  If you were skeptical, you had a right to be.

Jamie Dupree brings us the rest of the story:

The issue came up yesterday at a hearing with the special watchdog on the Wall Street Bailout, Neil Barofsky, who was asked several times about the GM repayment by Sen. Tom Carper (D-DE), who was looking for answers on how much money the feds might make from the controversial Wall Street Bailout.

“It’s good news in that they’re reducing their debt,” Barofsky said of the accelerated GM payments, “but they’re doing it by taking other available TARP money.”

In other words, GM is taking money from the Wall Street Bailout – the TARP money – and using that to pay off their loans ahead of schedule.

“It sounds like it’s kind of like taking money out of one pocket and putting in the other,” said Carper, who got a nod of agreement from Barofsky.

“The way that payment is going to be made is by drawing down on an equity facility of other TARP money.”

Translated – they are using bailout funds from the feds to pay off their loans.

Somehow this exchange never made it to other media outlets.

With this administration, question everything.  Heck, with any administration, question everything – but it seems it is an especially important thing to do with this one.  And when it comes to politics take nothing the press says at face value – ever.



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18 Responses to GM’s claimed debt repayment

  • Where would GM get that kind of money if not from borrowing it from elsewhere?  Claiming that GM has paid back its loans is the same sort of bullsh*t claim as “jobs saved or created”*.

    It’s nice to be Imeme: he doesn’t have to pay a bit of attention to reality.


    As we’ve found out, Imeme can make those claims by simply adding and deleting jobs from official reports.

  • That’s simply wrong.  Or wrongly cast.

    They’re taking money they got in return for the government’s equity stake to pay back the loan, if you want to look at it that way.

    Anyway, out of the (loans + cash for equity)  they gave 6.7 billion back.  Not all back like its being spun but its not like they’re giving nothing back either. 

  • If only I could find a way to get the government to lend me some money so I could pay them the money I owe them.
    On other fronts, CNN, ABC, CBS, NBC cover starlet fashion at Sundance, Godzilla destroys New York, , and coming up later on our health segment…VAT, can it really help YOU lose weight, stay tuned!

  • When I saw the news on Fox Business yesterday morning, I wondered where they found the money to pay back the loans.  This type of stuff doesn’t get done on the line, and GM has never been one to let profit sit idle.  They’re good at mis-spending what they make.  So this explanation makes a lot more sense.  Too bad the investors spent a day being optimistic about the payback.  Gee, if Goldman-Sachs tried this, they’d be regulated more.

    • ” Gee, if Goldman-Sachs tried this, they’d be regulated more.”
      Goldman-Sachs is still privately owned by people who obviously didn’t vote enough and/or pay enough to support the Transparency in Chief.

      • Actually quite the opposite and GS has been treated commensurate with their contributions.  FoxNews, however, has always tried to spin comparisons with the Auto Companies to make the Financial Bailout look less outrageous.  When you consider FoxNews recently split itself into a News Channel and Wallstreet Business Channel and the fact they are co-located in New York, its not surprising which industry FoxNews has empathy with. 

      • Take note that in spite of the “no more bailouts and too big to fail” BS, there’s all sorts of loopholes for more bailouts for companies too big to fail.

  • Good grief.

  • I sometimes twit the (Progressive) Executive Editor of the Reno (NV) Gazette Journal for printing stories that are pure Liberal Narrative.  The story they printed on the Business page today about the GM & Chrysler payments was straight from the AP and it read exactly like a White House press release would read on this story.  I would link it, but it does not appear in their online version.
    Anyway, as I am wont to do, I sent the Executive Editor an email praising her for the editorial action which resulting in their printing this story the way they did:
    “Gee, guess what!  I am a better news reporter today than anyone on the RGJ staff!
    Today I read on page 5B of the RGJ:  “GM Repays Loans”
    This is followed by claims that “the government’s unpopular  rescue is paying off”
    “This turnaround…” “It was the result of considered and politically difficult decisions made by President Obama…”  “This has exceeded our expectations…” all quotes from Administration officials.
    Journalism 101:  Where is the quote from the loyal opposition?  ABSENT
    This journalistic “puff piece” ended thusly:  “The final installments on those loans were repaid Tuesday.”
    Well, this terrific news was just so wonderful of the AP to report…I just wondered how those bad old Republicans felt about THAT!  Well, guess what?  Had the RGJ done its job instead of carrying the water for the Obama Administration by simply parroting the AP it could have learned THIS:

    “…they are using bailout funds from the feds to pay off their loans.”
    Considering this information makes this story quite different, doesn’t it?  That is, if one is not a captive of the Liberal Narrative and quickly editorially approves the printing of White House press releases word for word without doing any reporting.
    Would that be you?  Does rubber-stamping AP rubber stamps of these press releases get you off the hook?
    Shouldn’t this story be labeled “White House Press Release”?  Why not?
    Do you ever ask yourself any of these questions?”

  • The other day I read that banks are borrowing money from the Fed at less than 1% interest and buying gov’t. bonds that pay about 3%. Evidently we taxpayers are subsidizing just about every big business in the country.

    • .05% from the Fed and 3% back to the Treasury. Nice work if you can get it.
      To be fair, this has happened at least 3 times before. Starting in the 90s when Greenspan rescued Citigroup (where have I heard that name before?) from its disastrous loans to Mexico. Then again in 1996 when Asia went into the toilet and again in 1997/8 with Russia and LTCM.