Peter and Paul have never felt so used.
Government-owned General Motors, Inc. announced Wednesday they were repaying $8.1 billion in U.S. and Canadian government loans out of the $52 billion US and $9.5 billion Canadian and Ontario government money they received. And five years ahead of schedule.
GM repaid bailout money. Oh the elation from the Obama administration.
“This turnaround wasn’t an accident of history,” said White House economic adviser Larry Summers. “It was the result of considered and politically difficult decisions made by President Obama to provide GM and Chrysler — and indeed the auto industry — a lifeline, if they could demonstrate the will to reshape their businesses.”
Summers should recheck that result. Turns out, GM repaid taxpayer bailout money with other taxpayer bailout money.
And for their next trick, GM will pull a bunny rabbit out of their Chevy Malibu.
Neil Barofsky, the inspector general for TARP – aka the bailout – reported the money shuffle to the Senate Finance Committee. The money actually came from an escrow account from earlier TARP money.
“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.”
That isn’t how the White House or GM spun the repayment news. Vice-President Biden had praised Obama because he “took a lot of heat” for the bailout “and this has even exceeded our expectations.” It may be time to ask VP Biden to provide specifics about the administration’s expectations if this exceeded them.
GM CEO Ed Whitacre, appointed to the position by Obama, even held a press conference of the repayment at the company’s plant in Kansas where he flew in to announce the news while promoting additional investments in the factory there and in Detroit. There was no mention of the money being a transfer from one taxpayer funded account to another.
The news has prompted Sen. Chuck Grassley, the ranking Republican member of the Senate Finance Committee, to request an explanation from Treasury Secretary Timothy Geithner about why GM repaid bailout money with bailout money and the administration allowed it, while promoting it as money earned.
“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.