“Today, General Motors announced that it has repaid its $6.7 billion loan to the U.S. government in full five years ahead of schedule”
That’s from a blog post by Larry Summers, Director of the National Economic Council. There are two things wrong with that.
First, GM didn’t borrow just $6.7 billion. They borrowed $50 billion.
“GM’s repayment was a fraction of the $50 billion that the company received from the U.S. government last year. The big payback won’t come until GM goes public and the U.S. can begin to sell off its 60% stake in the company.”
Second, they didn’t pay back the money with their own earnings. How did they do it?
“‘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.'”
That’s right. They’re paying back their debt to the taxpayers…by getting further in debt to the taxpayers.
“‘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.”
Well, no kidding.
Well, maybe things will look better soon?
“‘When do you think we’ll have really good news from GM?’ Carper asked.
‘I don’t have a crystal ball on that Senator,’ Barofsky replied.”
Wow, this GM bailout has been such a great idea.