Free Markets, Free People

Jamie Dupree


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.

~McQ