How The Hell Did GM Pay Back Its Loans "in Full And Ahead of Schedule"? Well, It Didn't.

General Motors CEO Ed Whitacre has bragged in TV commercials and newspaper columns that GM has paid back its bailout "in full and ahead of schedule."

As with the Pontiac Aztek, an ugly exterior masks an ever darker problem: Whitacre is being fanciful to the point of deceit. GM received $50 billion in TARP funds (never mind that TARP was only supposed to cover financial institutions). About $7 billion of that came in the form of a straight-up, low-interest loan. And about $13 billion came in the form of an escrow account.

So how has GM, which lost $38 billion in 2007 even as it sold 9.4 million cars, paid back its debt? It took money from the escrow account to pay back the $6.7 billion loan.

Do you remember when you were a kid and your parents gave you $20 to buy them a Christmas present? You bought them something worth $3 and pocketed the rest? That's what GM has just done.

Oh, and do you remember when you hit your parents up for college? GM has applied for a $10 billion, low-interest loan from the government to modernize its plants so its cars will meet new federal mileage standards.

If you think all this constitutes paying back their debt in full and ahead of schedule, you might want to check out the new line of GM cars. And hope that the company's safety engineers are better at math than their CEO.

Category:

News & Politics

Tags:

• GM
• general motors
• bailout
• whitacre
• TARP
• payback
• big three
• corporate welfare
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• reason.org
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• reason foundation
• dan hayes
• meredith bragg
• nick gillespie

[fuguf1sh]

@JezebelDecibel Hear that whistling sound? That was the point of his analogy flying right over your head....

[stalrunner]

Buying Japanese cars is not as bad for the American auto industry as people say. When Americans buy foreign cars, it forces American automakers to say "crap, we need to improve our cars to get more customers". Competition, foreign and domestic, is just a passive method of quality control.

[stalrunner]

@luisrock2008 Yes, they get our money..... and we get a car. Both are better off. Have you ever heard of the law of comparative advantage? But really, lines on a map don't matter. What matters is that buyer and seller are both made better off by the exchange.

[luisrock2008]

@stalrunner Yes but if we buy there cars they can have the money to make newer cars. You just want an excuse to but foreign cars.

[tbzooski]

How did GM get away with filling bankruptcy when they received the BILLIONS from the tax payer bailout? What a sham! I thought the bailout was to prevent a bankruptcy I don't even think they needed the money to begin with! I feel GM's greed took the American people and our government for fools! And we won't ever get our tax dollars back. It makes me sick to hear how much there white collar employees are getting in bonuses when they still owe the tax payers billions!

[stalrunner]

@Zooni2 I can assure you that Gillespie is just as critical of oil and gas subsidies as he is of bailouts.

[josephc28]

Not only has GM fully paid back the loan they got from the government, but the government also owns 33% of GM's stock. The stock will have to double in price, before the government can even break even on the billions they spent buying it. Otherwise, they will take a loss. This probably means GM will have to have at least a few more years of solid profits before their stock price returns to the level it was when the govt bought the shares.

[josephc28]

@Zooni2 At least the oil and gas companies are actually producing jobs. Obama rejected the Keystone pipeline which would have added thousands more jobs. Yet, the democrats wanna keep subsidizing corn farmers and ethanol producers, when ethanol doesn't even lessen our dependence on foreign oil or help the environment. Nobody is hating on GM. They put themselves in the position they are in. The government still owns 33% of GM's stock. It will have to double in price for the govt to break even.

[Zooni2]

Hate on the American car company. What about the 34 Billion the GOP give to oil companies each year.

[newmissionorganics]

His hands are making me dizzy...

[realworldbycj]

@spikedpsycho I commend Ford for not taking a bailout. But their Trucks are the ONLY thing still manufactured in the states. How does that create jobs?

Plus; never really been a big Ford fan, ever. I just don't like their vehicles.

[realworldbycj]

I'll never buy another brand new Chevy product again. I used to buy nothing BUT Chevy. Well, when they accepted that bailout, they lost all my respect and business. I'll only buy used Chevy vehicles now, from used dealers. And I very well may not buy another Chevy again, period. It's not whether they pay their loan back or not, it's that they accepted it in the first place.