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Don?t believe the hype on GM?s loan repayment

Presented for your consideration..

Did you hear the good news? GM is ?repaying in full? its loans from the U.S. and Canada, and almost five years early. Let?s break out the champagne and celebrate the comeback of the century! Looks like the taxpayer bailout of GM and the UAW was a success after all.

Are you kidding me? C?mon! They must think we?re all idiots with short memories. The entire notion that GM can repay anything is laughable at best. Ed Whitacre, GM?s CEO, was all aglow this week in an op-ed piece in the Wall Street Journal as he described the great condition of the new company ? or should I say our company since taxpayers own about 60 percent of it.

He forgot to mention the $52 billion bailout from the U.S. government, i.e. you and me, and $9.5 billion from the Canadian government. Then there?s that little matter of Congress allowing the company to change $43.3 billion of our $52 billion loan into equity (stock) in the company, therefore taking the loan off the books. This left just a $6.7 billion loan from the U.S. and $1.4 billion from Canada, which they recently have repaid with some of the $43.3 billion in equity investment.

Look carefully at that last sentence again. We were literally repaid with our own money. I?ve seen shell games that were less rigged than that. To use a very technical economic term, we got taken to the cleaners.


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It's just like...

To pay that 4.7 Billion dollars, they drew that money from an existing line of credit from TARP funds in a Treasury escrow account. The problem is, that draw down means that they now owe that money, but to another source. It's just like paying off a credit card by putting the amount owed on another credit card.
Biden called that move a "huge accomplishment".

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(NT) Rob Peter, Pay Paul.
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To add insult to injury,

the Obama administration wants to impose special taxes on banks to pay back all of the TARP funds. That includes banks who did not need any money, and have repaid anything that they were forced to take.

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RE: impose special taxes on banks

impose special taxes on banks to pay back all of the TARP funds.

That's terrible.

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Thanks Ed. Good to know since it's buried in the

newspapers and news reports. Much appreciated.


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The money which needs to be accounted for.

Kind of like the TARP money sunk into Government Motors which will never be paid back by Government Motors?

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Well, this is the fed owned part of Citibank...

... they are now selling off. Yes, the original money used to buy up shares in Citibank is part of the TARP program. However, In this instance the money invested looks to show a decent return.

While I had BIG problems with the way the Fed handled the emergency loans (during both the Bush and Obama administrations)... the one thing I did agree with was if the Fad was going to "invest" money, then they better damned well have actual stock or property to show for the money spent. Stock or property that could be sold after a certain amount of time. To the point, the Fed better make money off the tax money spent. In this instance it appears they might actually make a profit... maybe.

My feeling at the time of the original rush back in 2008 to give Fed money away should have been that all money accepted by any business should come with the expectation of interest paid back on ALL money loaned out. A tenth of a percent return would have been fine by me, just as long as these companies were to realize that taking the money was not free. Let GM go under... let AIG tank... or let them start running their companies like we have to run our households which meant taking a loan out was going to cost them and that huge luxury benefits and bonuses would be a thing they could no longer afford.

We all know how that went.

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I'm not sure what your point is.

As far as the financial institutions are concerned, the Fed has been paid back. The most important part of that payback was that the economy did not completely melt down. In fact, employment stayed at fairly high levels. How much was that worth? That's the main reason AGI was a big deal. My bet is that AIG is now owned by the government. I do know that the government agreed that bonuses had to be paid. It was that little inconvenience that we call the law. The other private financial institutions must either pay their "loans" with interest or give the Fed shares of stock. Either way, the government comes out ahead.

Now, what will the Fed get from Government Motors? Unending responsibility for the union workers, their health care, and their pensions?

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