Government Motors pays back government loan – um, er, not really

Government Motors made a big announcement yesterday – they have paid off $4.7B of their $6.7B government loan, and they’re doing it 5 years early! Amazing! Way to go, GM! We always knew the taxpayer bailout would work. But wait a minute, there’s something you’re not telling us. (story here)

It was with great fanfare yesterday that General Motors announced that it was repaying some $4.7 billion of $6.7 billion in loans it received from the federal government.  And, with even bigger fanfare, it was announced that this partial repayment was being made some five years earlier than expected.

Too good to be true?  Well, it is.

What you weren’t told was that GM was able to repay the money by drawing down on a line of credit that it had from TARP!  In other words, GM took funds still available to it through TARP and used those funds to repay the loan it received from the government.  Of course, it now owes $4.7 billion on its line of credit with TARP, but, that doesn’t make for good news, so it wasn’t reported.

Also unmentioned was the minor detail that the taxpayers gave GM a total of over $60B, with about $53B converted into GM stock which the taxpayers now own. But who cares about details – right?

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One Response to “Government Motors pays back government loan – um, er, not really”

  1. […] loans “…in full, with interest, five years ahead of the original schedule.” (more here) Even the state-run media is running with the […]

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