Administration Pushes False General Motors Success Story
May 3, 2012
Of the top bailout recipients, General Motors (GM) is the biggest laggard, the TARP watchdog says in its latest quarterly report to Congress, says Investor's Business Daily.
- Bank of America, Citigroup, Chrysler and Chrysler Financial all have paid off their debt and left the TARP program.
- Even AIG has paid back more than 75 percent of what it owes taxpayers.
- GM, on the other hand, still owes more than half the $50 billion in federal funds it received when the combination of the recession and its costly union contracts drove it into bankruptcy.
- And its lending arm, GMAC (now Ally Financial), still owes $14.5 billion.
What's worse, it's not clear that GM actually repaid what it's gotten credit for repaying. Indeed, the inspector's report notes: "As part of a credit agreement with Treasury, $16.4 billion in TARP funds were placed in an escrow account that GM could access only with Treasury's permission."
As it turns out, GM got Treasury's OK to "repay" more than $6.7 billion "using a portion of the escrow account that had been funded with TARP funds." So GM is merely paying the government back with government money, not money GM is earning selling cars, as the administration has claimed.
Worse, GM in effect is still borrowing money. Consider this item from the report: "What remained in escrow was released to GM." Bottom line: Taxpayers have not been paid back and are still on the hook as GM continues to require government help.
Source: "Obama Pushes False GM Success Story," Investor's Business Daily, April 30, 2012.
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