Will The Tax Payors Ever Get Back Their Investment In GM?

"Tax Payors"? See if you can get your money back on that education.

"Will The Tax Payors Ever Get Back Their Investment In GM?"




"...The U.S. Treasury, which in 2009 took a 61 percent stake in GM for its $49.5 billion bailout, also reduced its majority ownership"


"...Last week, the company reported it had $33 billion in cash"


"...[U.S. Treasury] officials to indefinitely hold off selling its remaining 27 percent stake"




Hmmmm

Sounds like an international mystery to me.

No mystery, Agent!

A surprising number of our *favorite* brands (even premium ones) flourishing today faced extinction at some point in their past.


What GM needs to do is build a solid CORE of WELL MADE cars / trucks people want. The rest will sort itself out!!

So, to me, the question is not whether the tax payers will get their money back as it is "what will GM do with its new lease on life?" (pun intended)

No next question ! Though wouldn't it be nice if GM wrote each and every tax payor a check...just a thought.

The Truth-O-Meter Says:

GM has "repaid our government loan, in full, with interest, five years ahead of the original schedule."

Ed Whitacre on Wednesday, April 21st, 2010 in a TV ad


CEO says GM has repaid government loans in full

In an ad reminiscent of Lee Iacocca's "Thanks, America" commercials in 1983 after Chrysler had repaid government-backed loans, General Motors CEO Ed Whitacre has taken to the prime-time airwaves to boast that GM has paid back its government loans, in full, and ahead of schedule.

"A lot of Americans didn't agree with giving GM a second chance," Whitacre says in the ad. "Quite frankly, I can respect that. We want to make this a company all Americans can be proud of again. That's why I'm here to announce we have repaid our government loan, in full, with interest, five years ahead of the original schedule. But there's still more to do. Our goal is to exceed every expectation you've set for us."

In addition to Whitacre, the loan repayment has been trumpeted by President Barack Obama and numerous members of his administration.

It's true that GM has squared up on its government loans, but Whitacre isn't telling the FULL story.

With GM in deep trouble and hundreds of thousands of jobs in the balance, the Obama administration -- through the Troubled Asset Relief Program (TARP) -- stepped forward with tens of billions of dollars worth of assistance. As of March 31, 2010, the U.S. Treasury had committed approximately $52.4 billion to GM.

ONLY a fraction of that, $6.7 BILLION, was in the form of LOANS. Most of the government's GM investment was converted to an OWNERSHIP stake in the New GM, the company that emerged from bankruptcy: $2.1 billion in preferred stock; and 60.8 percent of the company's common equity.

GM had already made several installments in paying back the $6.7 billion loan. But on April 21, 2010, GM announced that it had paid back the entirety of the remaining $4.7 billion in loans from the U.S. government (and another $1.1 million to the Canadian government). GM had until 2015 to pay back those loans.

So the LOAN portion of the GM bailout was, in fact, SETTLED, with INTEREST, five years ahead of schedule.

But the U.S. government is still on the hook for the bulk of its investment in GM. Again, the U.S. Treasury owns $2.1 billion in preferred stock and a 60.8 percent stake in the company. GM plans an initial public offering (IPO) as soon as this summer, and the government plans to sell off its interest in the company over time. The better the company does, the more the government looks to recoup. But the prospects for the government getting all its money back don't look promising.

On March 18, 2010, the government's nonpartisan Congressional Budget Office projected the government will end up losing $34 billion in TARP funds extended to the automotive industry. The CBO didn't break out how much of that is tied to GM, but it's fair to say most of it.

While we found a GM o

"FULL QUESTION

There are GM commercials and mass mailings that say they’ve paid back their "government loans" ahead of schedule with interest. Didn’t the government take a 71% ownership in the company? Was that a loan or is the loan a smoke screen for the actual government ownership?


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Has GM repaid its bailout loan in full with interest, 5 years ahead of schedule?

GM is running advertisements claiming the above statement is true, and the President seemed to reaffirm that claim in his most recent radio address. However, Sen. Grassely (R) claims that GM is using other bailout funds in order to pay off the aforementioned bailout funds and their claim is simply an accounting trick.

FULL ANSWER

Many readers have asked us about the White House-touted news that General Motors, and Chrysler, repaid loan money from the Treasury Department, with interest, ahead of schedule. GM launched an ad boasting of the news, and President Obama talked about it in his weekly address on April 24.

We wrote about this, too, on April 26 in a review of the Sunday political talk shows. Here’s the deal for those who missed that post:

Yes, it’s true that GM paid back its loan from the Treasury Department, in full, ahead of schedule.
But the debt was only part of the automaker bailout package. Through the Troubled Asset Relief Program, the Treasury gave GM $49.5 billion, most of which was converted into an ownership stake in the form of stock. Through this equity stake, the government still owns 61 percent of GM.
Some Republicans, including Sen. Chuck Grassley of Iowa have pointed out that GM used TARP money to pay back its TARP debt. That’s true, but GM simply handed back TARP money it had been lent and hadn’t used. Those funds had been sitting in an escrow account, should the automaker need them. (The company didn’t borrow new money to pay back an older loan.)
Grassley has argued that this wasn’t a "meaningful" repayment of a loan, since it didn’t come from earnings. That’s an opinion, and we’ll leave it to readers to agree or disagree with the senator. The TARP special inspector general, Neil Barofsky, has said the repayment was "good news," since it meant the automaker didn’t need to use those funds held in escrow. In testimony before the Senate Finance Committee on April 20, Barofksy made it clear GM still was operating with government help:

Barofsky, April 20: G.M. has paid $1 billion, and I think they’ve announced that they’re going to be paying back the debt portion, which is about — I think there’s about $6 billion left in its entirety very shortly. But we should be a little — we need to be a little bit cautious about that because the way that that payment’s going to be made is drawing down an equity facility of other TARP money.

So it’s good news in that they’re reducing their debt, but they’re using it by taking other available TARP money to repay the