"General Motors repayment fraud"

The Washington Times has this something new to report on the "repayment" here. They make it quite clear that General Motors was only able to pay back the loan by using government TARP money.

The chairman and CEO of General Motors, Ed Whitacre, though makes it sound as if the company was able to pay things back early because the company has been doing quite well.

Our ability to pay back these loans less than a year after emerging from bankruptcy is a sign that our plan for building a new GM is working. It is also an important step toward eventually reducing the amount of equity the governments of the U.S., Canada and Ontario hold in our company. Combined, these governments hold a majority of GM's equity, and we want citizens to know how their governments' money is being put to work. . . .

A copy of one of their ads appearing on all the Sunday morning talk shows that touted the repayment is here.

As the Washington Times piece makes clear, part of the bailout went into an “escrow fund,” and that government money is being used to pay back the small part of the bailout that was officially a loan. An article in Forbes shows that at the same time that this loan has been paid back GM is asking for another $10 billion loan to retool its plants to meet the stiffer Corporate Average Fuel Economy standards, and paying back one government loan — with other government money — will make it easier to get another government loan.

From Meet the Press:

MR. GREGORY: If the, if the, if the, if the complaint is government's not up to it, we had regulators before, can they do it this time, and we're so worried about bailouts, look at the track record of bailouts so far. The president was boasting yesterday that GM and Chrysler have paid off their debts, not completely, but, but, but way ahead of schedule. TARP is now $186 billion back. The overall payment is supposed to be around $87 billion. The record's been pretty good that the government's and the taxpayer have done OK so far in bailouts, have they not?

SEN. SHELBY: First of all, the payback by General Motors and Chrysler will never happen, not all of it. That's misleading, even what the president said there. And they paid back some money that they were already given by the TARP money. They haven't paid back the other, and they won't. Some of the banks have paid back the money, and that's good. But we should never go down that road again. If the regulators do their job and if we tighten this legislation, we won't have to visit it again.

From Face the Nation:

BOB SCHIEFFER: But I-- I guess, the question that I have is-- is, when did you decide that? Because, clearly, you thought General Motors was too big to fail? You bailed General Motors out. When did you decide these bailouts are not a good thing? I’m not saying they’re good or bad. I’m just asking--
LARRY SUMMERS: Well, let’s take-- let’s take General Motors, Bob. Shareholders, zero; chief executive officer, gone; senior management team, changed; bondholders, largely wiped out. Yes, the President did decide and it took courage because many people opposed it at a moment when the credit markets weren’t working to let General Motors go bankrupt and lend General Motors money. General Motors paid back the loan part of the support this year. The value of General Motors is today much higher than anyone thought likely a year ago. You know, President took an enormous amount of criticism for what he did. . . .