Who cooked up this absurd advertising campaign crowing about General Motor’s lies that it paid back its taxpayer-funded loans “in full and ahead of schedule”? When I first saw the GM Ed Whitacre ad, I instantly knew this had to be some kind of trick. (GM Repaid Government Loan Ahead of Schedule). He strides toward the camera with a phony cheery optimism thanking the American public for giving them a “second chance”. I don’t recall choosing to give GM a “second chance”, do you? What I remember is Henry Paulson, George Bush and Timothy Geithner allocating funds from the bank TARP fund to “bailout” GM. New “private” equity chief, Barack Obama, was quite happy to keep the program going and assigned oversight to new Treasury Secretary Tim Geithner.
GM was already a dead company walking years before they seized on the TARP opportunity. Even during the height of the economy they were hemorrhaging money. In the four years beginning in 2005 and ending in 2008, General Motors lost $10 billion, $2 billion, $39 billion, and $30 billion, respectively, in each year. That’s a lot of change. The economy was making record profits, but GM was making record losses. Banks and lenders were hoping against hope that some kind of miracle would fix GM’s problem and keep them float. That miracle was you, otherwise known as the American taxpayer.
But Whitacre and Geithner would have you believe that GM was just another victim of the real estate and financial crisis, as if they were collateral damage of Wall Street preying on Main Street paragons like GM. Many have already described why this claim by GM and the Government is so ridiculous. But it reveals the deception and thievery, which is crony capitalism. The Federal Government gave almost $50 billion to GM. About $7 billion was in the form of an interest-bearing loan. The remaining money was split between a direct “equity investment” and a second pool of money in a so-called escrow account which GM could draw on with the permission of Treasury Secretary Geithner.
GM is still losing money at the rate of $800 million a quarter, even with its severely downsized operations (not counting the $2.4 billion of losses related to the “settlement” cost with the UAW). So how did they pay this $7 billion back? They simply took money from the “escrow account” and paid back the loan. That is to say, they did not pay anything back. In fact, the new money is now “equity”. This was done to lower GM’s cash flow burden. Not only was this money not actually paid back, GM no longer has to pay interest on it. No wonder Whitacre appears so chipper.
If they merely did this without doing an end zone celebration dance, it would simply be irritating. But having the nerve to brag about it on top of it through prime time advertisements (paid for by you) is an outrage.
Who are these people?