GM's Big Lie

[Shady]

I'm not sure about the rest of you, but I'm sick of seeing the CEO of GM on television proclaiming that they've repaid their loans 5 years early with interest.

Unlike U.S. banks like JPMorgan Chase & Co., which raced to repay billions in U.S. Treasury bailout money in part to free themselves from government restrictions on executive pay, analysts say GM's repayment announcement is all about repairing its public image.

The U.S. and Canadian loans, totalling US$8.1-billion, are tucked away in an escrow account that GM has not tapped. GM said it will use that fund to make the repayments, meaning it is simply paying the governments back with their own money.

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If they're this dishonest regarding their loan repayment. How do they expect anyone to buy their cars again?

[Smallc]

Well, it isn't really dishonest (they are paying the loans back). They're just leaving out the fact that they got a lot more than loans.

[Shady]

Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn't, the company, which couldn't raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Mr. Whitacre publishes a column with the headline, "The GM Bailout: Paid Back in Full," most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7% interest rate--a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company--arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7% equity stake. The U.S. and Canadian government together own 72.5% of the company.)

But when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

But wait! Even that's not the full story given that GM, which has not yet broken even, much less turned a profit, can't pay even this puny amount from its own earnings.

So how is it paying it?

As it turns out, the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money--government money--to pay back the government loan

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[Jack Weber]

I'm not sure about the rest of you, but I'm sick of seeing the CEO of GM on television proclaiming that they've repaid their loans 5 years early with interest.

If they're this dishonest regarding their loan repayment. How do they expect anyone to buy their cars again?

If their CEO's are this dishonest,there's no wonder why they unionized a long time ago!!!

[bush_cheney2004]

If their CEO's are this dishonest,there's no wonder why they unionized a long time ago!!!

...which would be a perfect match for UAW and CAW corruption.

[kimmy]

If they're this dishonest regarding their loan repayment. How do they expect anyone to buy their cars again?

If they come out with something I like, I'll consider it. The new Camaros sure are pretty...

-k

[Pliny]

If their CEO's are this dishonest,there's no wonder why they unionized a long time ago!!!

They laughed at the competition for too long. That was their primary mistake. The second mistake was the shortsightedness that unionization brings to the bargaining table. The third mistake was primarily becoming a finance company over an automobile manufacturing company. Now they are GM - Government Motors, and inevitably subject to demise or some form of complete metamorphoses.

[Handsome Rob]

They laughed at the competition for too long. That was their primary mistake. The second mistake was the shortsightedness that unionization brings to the bargaining table. The third mistake was primarily becoming a finance company over an automobile manufacturing company. Now they are GM - Government Motors, and inevitably subject to demise or some form of complete metamorphoses.

Is that tale true that GM was/is the US's largest pensioner and medicare provider?

[Pliny]

Is that tale true that GM was/is the US's largest pensioner and medicare provider?

I don't really have any information on that.

This is what I found regarding Pensions.

General Motors Corp., Detroit, the largest U.S. corporate pension plan, had a funding ratio of 118.7% in 2006, up from 106.9% in 2005. The return on plan assets was 13.2%, up from 11.5% in 2005, according to the annual report. GM contributed approximately $80 million to the plan in 2006.

Second-place AT&T Inc., San Antonio, recorded an increase in part because this was the first year the company included BellSouth Corp’s assets in its totals. AT&T completed its purchase of BellSouth in December.

So it is the largest US Corporate Pension Plan.

[Shady]

Is that tale true that GM was/is the US's largest pensioner and medicare provider?

Not sure. But it was the largest private purchaser of Viagra in the world.