Senator: GM paid U.S. federal loans with other federal money
Posted: Apr 23, 2010

A Republican senator said that General Motors’ payment of federal loans this week was nothing more than a “money shuffle” and said that the company paid federal loans with other U.S. funds.

Sen. Charles Grassley of Iowa, a senior Republican on the Finance Committee, cited an auditor’s report that GM payment was coming from U.S. Troubled Asset Relief Program funds in an escrow account, rather than from GM earnings.

“It is unclear how GM and the administration could have accurately announced yesterday that GM repaid its TARP loans in any meaningful way,” Grassley said in a letter to U.S. Treasury Secretary Timothy Geithner. “The taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government’s ability to sell GM stock in the future.”

GM announced on April 21 that it made its final payment of $5.8 billion to the U.S. Treasury and Export Development Canada, paying back its government loans in full.

GM received $50 billion of U.S. assistance in its bailout, much of which was converted into stock. The Obama administration holds 61 percent of the common stock in the Detroit automaker.

Lawmaker Calls GM Payment Misleading
By JOHN D. MCKINNON

A top Republican senator said General Motors' announcement this week that it will repay its federal loans early is "nothing more than an elaborate TARP money shuffle."

In a letter to Treasury Secretary Tim Geithner, Sen. Charles Grassley of Iowa said that the source of the funds for the $4.7 billion repayment is not GM earnings, but rather a Treasury escrow account. He chided GM and the White House for suggesting in recent statements that the money is from GM earnings.

Mr. Grassley wrote that GM's early repayment of the federal loan is aimed at diverting attention from another uncomfortable issue—the big break the car company would get on a proposed tax to recoup TARP losses. GM is expected to generate some of the biggest losses in the TARP program, but it won't have to pay any money under the so-called TARP tax the Obama administration wants to impose on large financial institutions.

Treasury and GM officials don't dispute that the money to repay the loan is coming from TARP funds. But they said that's been clearly disclosed.

A GM spokesman said the company is paying back the loan early "because we're making great progress and we have a great line up of vehicles that are selling very well."

A Treasury spokesman said, "It's been public knowledge that GM would use these funds to repay the loan if it did not otherwise need them for expenses."

He added: "The important fact is that GM has determined that it does not need the funds to pay expenses and can repay the loan early. That is a positive sign for the company, and a great development for the taxpayer."