GM to Pay Off $6.7 Billion Loan 5 Years Early.
#1
Lexus Fanatic
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GM to Pay Off $6.7 Billion Loan 5 Years Early.
I watched an interesting story on the PBS News Hour this evening (a show I watch pretty regularly). GM is ready to pay off the last of the actual loan part of the money it got last year....$6.7 Billion. That, of course, is not the whole amount, as much of the rest of the money went for different reasons.
The actual loan repayment this early, though not out of the tunnel yet, makes you wonder if the corporation was really as bad off last year as the picture that was painted.....and the bankrupcy settlement. This is an interesting article/video...and spin...on that.
http://www.pbs.org/newshour/bb/afric...ors_04-21.html
The actual loan repayment this early, though not out of the tunnel yet, makes you wonder if the corporation was really as bad off last year as the picture that was painted.....and the bankrupcy settlement. This is an interesting article/video...and spin...on that.
http://www.pbs.org/newshour/bb/afric...ors_04-21.html
Last edited by mmarshall; 04-23-10 at 07:43 PM.
#2
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Thanks for posting, this answered some questions I had.
I was wondering about the details since seeing this ad earlier this week.
http://www.youtube.com/watch?v=SSNPFVLIWjI
According to CEO Ed Whitacre, it is already paid back.
I was wondering about the details since seeing this ad earlier this week.
http://www.youtube.com/watch?v=SSNPFVLIWjI
According to CEO Ed Whitacre, it is already paid back.
#3
Lexus Fanatic
iTrader: (2)
I watched an interesting story on the PBS News Hour this evening (a show I watch pretty regularly). GM is ready to pay off the last of the actual loan part of the money it got last year....$6.7 Billion. That, of course, is not the whole amount, as much of the rest of the money went for different reasons.
The actual loan repayment this early, though not out of the tunnel yet, makes you wonder if the corporation was really as bad off last year as the picture that was painted.....and the bankrupcy settlement. This is an interesting article/video...and spin...on that.
http://www.pbs.org/newshour/bb/afric...ors_04-21.html
The actual loan repayment this early, though not out of the tunnel yet, makes you wonder if the corporation was really as bad off last year as the picture that was painted.....and the bankrupcy settlement. This is an interesting article/video...and spin...on that.
http://www.pbs.org/newshour/bb/afric...ors_04-21.html
Below came out days ago through various sources.
General Motors is running ads on all the major networks this week claiming it has repaid its bailout from the taxpayers "in full." But the claim isn't standing up to scrutiny from lawmakers and government watchdogs who have found that the automaker was able to repay the bailout money only by dipping into a separate pot of bailout funds.
The TV spot may land GM in hot water
with the Federal Trade Commission over its truth-in-advertising laws, which prohibit ads that are "likely to mislead consumers."
"We have repaid our government loans in full — with interest — five years ahead of the original schedule," says Ed Whitacre, chairman and CEO of General Motors Company, asking Americans to give the bankrupt company another look.
But a top Senate Republican has accused GM of misleading taxpayers about the loan repayment, saying the struggling auto giant was able to repay a $6.7 billion bailout loan only by using other bailout funds in a special escrow account.
Iowa Sen. Chuck Grassley's charge was backed up by the inspector general for the bailout — also known as the Trouble Asset Relief Program, or TARP. Watchdog Neil Barofsky told Fox News, as well as the Senate Finance Committee, that General Motors used bailout money to pay back the federal government.
"It appears to be nothing more than an elaborate TARP money shuffle," Grassley, the ranking Republican on the Senate Finance Committee, said in a letter Thursday to Treasury Secretary Timothy Geithner.
The FTC said it could not provide any comment on the ad or whether it had received any complaints or inquiries about GM's claims from the public or from government officials.
The FTC has a division of advertising practices that investigates possible false claims, but specific investigations are not made public. If the FTC determines that truth-in-advertising laws have been violated, the agency files complaints against the organizations in violation.
GM announced Wednesday that it had paid back the $8.1 billion in loans it received from the U.S. and Canadian governments in 2009. Of that, $6.7 billion went to the U.S. Treasury.
"A lot of Americans didn't agree with giving GM a second chance," Whitacre said in the 60-second ad. "We invite you to take a look at the new GM."
Well, meet the new GM. Same as the old GM. The company is still majority-owned by the federal government, which has a 60 percent stake in the Detroit titan; the Canadian government owns another 12 percent.
GM is not yet solvent, continues to be racked by debt and is still unable to turn a profit — something that has eluded the company since 2004. GM filed for bankruptcy in 2009 but was saved from collapse by a $52 billion infusion from the federal government.
But the company says the repaid TARP loan is a "good start," a signal that the company is emerging from its debts and moving back into the black.
"I think any way you look at it, that we're giving (loans) back with interest before we had to should be taken as a positive sign," said GM spokesman Greg Martin.
Martin said GM has not received any communications from the FTC or complaints from federal officials, and said that public feedback has been positive.
But Senator Grassley has called on Treasury Secretary Geithner to provide more information about why the company was allowed to use bailout money to repay bailout money, and how much of the remaining escrow money GM would be allowed to keep.
"The bottom line seems to be that the TARP loans were 'repaid' with other TARP funds in a Treasury escrow account. The TARP loans were not repaid from money GM is earning selling cars, as GM and the administration have claimed in their speeches, press releases and television commercials," he wrote.
But Barofsky told Fox News that while it's "somewhat good news," there's a big catch.
"I think the one thing that a lot of people overlook with this is where they got the money to pay back the loan. And it isn't from earnings. ... It's actually from another pool of TARP money that they've already received," he said Wednesday. "I don't think we should exaggerate it too much. Remember that the source of this money is just other TARP money."
Barofsky told the Senate Finance Committee the same thing Tuesday, and said the main way for the federal government to earn money out of GM would be through "a liquidation of its ownership interest."
Grassley criticized this scenario in his letter.
"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. Treasury has merely exchanged a legal right to repayment for an uncertain hope of sharing in the future growth of GM. A debt-for-equity swap is not a repayment," Grassley wrote.
#6
Moderator
So GM is paying back the loan with money from another part of the loan. Isn't that the same thing as paying off a Visa credit card balance with a Mastercard credit card?
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#8
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"GM still owes $45.3 billion to the U.S. and $8.1 billion to Canada, money it received in exchange for large stakes in the company. The U.S. government now owns 61 percent of the company and Canada owns roughly 12 percent. GM plans to repay both with a public stock offering, perhaps later this year.
GM had made about $2 billion in loan payments to the U.S. government and $384 million to Canada in December and March, and had promised to repay the full loans by June. But company officials have said its cash flow, mainly from the sales of newer models, has been better than expected, allowing it to make the remaining $5.8 billion in payments early.
GM officials say the company's public stock offering will take place when the markets and the company are ready. They will not predict how much of the remaining government debt will be repaid from the stock offering, but said it likely will take years for the governments to divest themselves fully.
The stock offering hinges on GM posting a profit, which Whitacre has said could come this year. GM lost $3.4 billion in the fourth quarter of 2009 on revenues of $32.3 billion."
GM had made about $2 billion in loan payments to the U.S. government and $384 million to Canada in December and March, and had promised to repay the full loans by June. But company officials have said its cash flow, mainly from the sales of newer models, has been better than expected, allowing it to make the remaining $5.8 billion in payments early.
GM officials say the company's public stock offering will take place when the markets and the company are ready. They will not predict how much of the remaining government debt will be repaid from the stock offering, but said it likely will take years for the governments to divest themselves fully.
The stock offering hinges on GM posting a profit, which Whitacre has said could come this year. GM lost $3.4 billion in the fourth quarter of 2009 on revenues of $32.3 billion."
#10
Lexus Fanatic
Thread Starter
Originally Posted by J.P.
This is a big joke around Detroit, this was nothing but PR
Originally Posted by Pearlpower
You need to change your sources for auto news.
Below came out days ago through various sources.
Below came out days ago through various sources.
Though some of it is undoubedly PR, the whole world of corporate finances has gotten so complex (and this seems to be no exception) that it's often hard to separate fact from fiction.
#12
Lexus Fanatic
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Yes, I get my news from many sources. This was an interesting story, though, and worthy of comment and debate. Several posters here have alreay made some interesting points, including you two.
Though some of it is undoubedly PR, the whole world of corporate finances has gotten so complex (and this seems to be no exception) that it's often hard to separate fact from fiction.
Though some of it is undoubedly PR, the whole world of corporate finances has gotten so complex (and this seems to be no exception) that it's often hard to separate fact from fiction.
#14
Lexus Fanatic
Thread Starter
And, of course, Toyota's PR department is working overtime right now.
#15
Lexus Fanatic
I saw the commercial as well and think its hilarious when the guy in the commercial states that they will get back to building the best cars and trucks in the world. My wife and I were laughing because we know they were never building the best acrs and trucks in the world.....at least not in the last quarter century