General Motors Pays Off Bail Out????

Lawmakers Accuse GM, Administration of Misleading Public Over Loan Repayment

A handful of lawmakers are accusing General Motors of misleading the public by continuing to claim as part of its advertising blitz that the auto giant has repaid its government loans "in full."

General Motors has been running ads on all the major networks claiming the company repaid its $6.7 billion U.S. government loan "with interest five years ahead of the original schedule." General Motors Company CEO Ed Whitacre can be seen in the ad walking through an auto plant as he touts the company's progress.

But lawmakers, and even the inspector general for the bailout fund GM borrowed from, point out that General Motors only repaid the bailout money by dipping into a separate pot of bailout money. They say the company did not actually use its own earnings to make the early payment and are questioning why executives are making such a big deal out of it.

"The hype is not the reality," Sen. Charles Grassley, R-Iowa, wrote in a column on FoxNews.com over the weekend. "It is far from clear how GM and the Obama administration could honestly say, much less trumpet in prime time television ads, that GM repaid its TARP (Troubled Asset Relief Program) loans in any meaningful way."

Grassley wrote a letter last week to Treasury Secretary Timothy Geithner expressing his concerns and asking for more information about why the company was allowed to use bailout money to repay bailout money.

The $6.7 billion is also just a fraction of the $52 billion General Motors received in government aid. Grassley said lawmakers are being told government losses on GM are expected to exceed $30 billion.

The TARP inspector general, Neil Barofsky, bluntly told the Senate Finance Committee during a hearing last week that the repayment "is just other TARP money" and lawmakers should not "exaggerate" the feat.

"It sounds like they're kind of like taking money out of one pocket and putting it in the other to do that," Sen. Tom Carper, D-Del., said at the hearing.

Sen. Richard Shelby, R-Ala., expressed similar concerns Sunday on NBC's "Meet the Press," saying it's "misleading" for the administration to claim the company has paid back its loans.

The GM ad could potentially land the company in trouble with the Federal Trade Commission over its truth-in-advertising laws, which prohibit ads that are "likely to mislead consumers."

The FTC would not comment on the specific GM ad.

General Motors admits that the company is repaying the loan with other government money, but says a year ago "nobody thought we'd be able to pay this back."

4/27/106:53 AM

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deniscCaretaker of 8MA1244 '70 Euro Mangusta DRIVE THEM, THEY WERE MEANT TO BE DRIVEN, IF YOU WANT TO LOOK AT ONE, BUY A POSTER!

Sounds like the creative accounting there was at Ford too! At shareholder meetings they would say stuff like: we took a $4B advance for future projects' and not mention it at the next meeting. Also stupid things like selling buildings and companies for 50 cents on the dollar... Go figure, the VPs abuse of their salaries, expense accounts, benefits and private jet was (is) just an indicator on how they are totally disconnected.

Also not how Ford showed-up at the handout table and did not take any monies, what was that? Posturing in case the money was good
Denis

4/27/107:57 AM

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deniscCaretaker of 8MA1244 '70 Euro Mangusta DRIVE THEM, THEY WERE MEANT TO BE DRIVEN, IF YOU WANT TO LOOK AT ONE, BUY A POSTER!

This is not the first time GM does some crazy thing with governement monies.

Back in 1987, GM initially planned on closing its Ste. Therese assembly plant, which would've put thousands of employees out of work. Opened in 1965, Ste. Therese was Quebec's only automotive assembly plant, and was a key contributor to Quebec's economy. The Quebec government was willing to go the extra mile to keep it open. Both the government of Quebec and the government of Canada along with the local Canadian Auto Workers union stepped in with an almost irresistible package for GM. The governments granted GM a 220 million dollar (Canadian) interest-free loan, payable in 30 years. Both the Quebec and Ottawa governments each contributed 110 million each. GM also was awarded over 100 million dollars in tax breaks to keep the plant open.
In 2002 GM closed that plant and tore down the building, closing the door on ever having an auto plant in Quebec.

After this happened the Quebec parliament asked GM to payout their 30 year loan, naybody want to guess the answer. yes GM said they would repay the loan on term...in 30 years.. what a joke on taxpayers backs.

So yeah nothing new here. SBBDD

4/27/108:11 AM

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pantherMember

Wait...GM is still around? I'm shocked considering the dire predictions for the company after the bailout over a year ago. Bet their workers are happy.

Since you piqued my interest, I wondered how that other welfare company, CITIBank is doing. Well they've paid US (the taxpayers) back ...to the tune of $20 billion. After futher digging, didn't the U.S. government make money off of the Citibank rescue. A lot of money. Did Uncle Sam turn a $7.5 billion profit when it sold its Citi stock in early April?

4/27/1010:12 AM

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osofastMember

quote:
payable in 30 years

So that debt was wrote off in the bankruptcy process?

4/27/1011:16 AM

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markcharltonOld enough to know better and still young enough not to care. My '71 Pantera

Since we're in the Pub, and this isn't (too) political or religious...

Until we start finding ways to jail these financial fraudsters (and take away ALL their assets) and put a serious focus on companies creating REAL things, not just innovative ways of cooking the books, our economies are going to suffer big and for a LONG time. It used to be that companies focused on creating products and services of value with the outcome of getting it right being a profit at the end of the year. Owners and shareholders came second, after making sure the CUSTOMER was well served. Where did all this go wrong?

If I was in charge of making the rules, I would enact a law that limits executive compensation to some "reasonable" multiplier of the average wage of all employees within a given (large publicly-traded) company. And it wouldn't be 300! Maybe 30x, maybe 40x. That would put the average executive in a large company with a $2M or more income. Ought to be enough. Used to be. Maybe after all the shareholders (and employees) get a dividend that is measured in numbers greater than 1% we can talk about executive bonuses for exceptional returns and managerial excellence. Since when does anyone in a money-losing company deserve a multi-million dollar bonus? Where have shareholder rights gone?

I'm sure many free-market capitalists would call me a socialist and burn me at the stake, but I own two companies and dream about a day when my pay might be a multiplier greater than THREE of my average worker. How much is really enough? I always want more, but not if it means others need to have less so I can.

OK. I'm done my rant. Thanks,

Mark