GM Pays its Loans back to the US & Canada 5 Years early

[danefan]

http://www.google.com/hostednews/ap/art ... QD9F7I9B82" onclick="window.open(this.href);return false;

DETROIT — General Motors Co. has repaid the $8.1 billion in loans it got from the U.S. and Canadian governments, a move its CEO says is a sign automaker is on the road to recovery.

GM CEO Whitacre announced the loan paybacks Wednesday at the company's Fairfax Assembly Plant in Kansas City, Kan., where he said GM is investing $257 million in that factory and the Detroit-Hamtramck plant, both of which will build the next generation of the midsize Chevrolet Malibu.

The White House pointed to GM's repayment of the loan and Chrysler LLC's posting of an operating profit in the first quarter of 2010 as concrete signs that the bailout of the U.S. automakers was working.

In a report, they noted the American auto industry lost more than 400,000 jobs in 2008 and analysts estimated another 1 million would have been lost had GM and Chrysler liquidated. In the past nine months, the White House said the industry has added 45,000 jobs, the strongest job growth in the industry in nearly a decade.

"This turnaround wasn't an accident of history," White House economic adviser Larry Summers said in a blog posting.

GM got a total of $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments as it went through bankruptcy protection last year. At first the entire amount of U.S. aid was considered a loan as the government tried to keep GM from going under and pulling the fragile economy into a depression.

But during bankruptcy, the U.S. government reduced the loan portion to $6.7 billion and converted the rest to company stock, while the Canadian governments held $1.4 billion in loans.

The automaker hopes to repay the remaining $45.3 billion to the U.S. government and $8.1 billion to Canada via a public stock offering, perhaps later this year. The U.S. government now owns 61 percent of the company and Canada owns roughly 12 percent.

This is a great first step for GM, but the real proof of a success will happen when the IPO happens to see how much the US Gov't profited from the deal, if any.

[AZGrizFan]

See my post in the other thread regarding "the US Government runs big business."

[GannonFan]

So, we're still $45B in the hole in the GM deal, since the other $45B of the loan was retermed and made into actual ownership of the company. Plus, who's on the hook for the Old GM business that was carved out of this one and kept separate since that had all the losses and liabilities packaged into it? Is it just the non-union investors who got stuck with that decrepit asset or does that somehow come back to hurt the taxpayers?

Don't get me wrong, I'm fine with GM trying to dig itself out of the hole. Of course, the conspiracy folks will look at the troubles that Toyota had with the US govt right about the time that the US govt became the owners of GM and raise an eyebrow. But it's still a long way to go before we see if we ever get our money back from GM, and if this has just delayed the inevitible collapse of it somewhere in the future.

[danefan]

So, we're still $45B in the hole in the GM deal, since the other $45B of the loan was retermed and made into actual ownership of the company. Plus, who's on the hook for the Old GM business that was carved out of this one and kept separate since that had all the losses and liabilities packaged into it? Is it just the non-union investors who got stuck with that decrepit asset or does that somehow come back to hurt the taxpayers?

Don't get me wrong, I'm fine with GM trying to dig itself out of the hole. Of course, the conspiracy folks will look at the troubles that Toyota had with the US govt right about the time that the US govt became the owners of GM and raise an eyebrow. But it's still a long way to go before we see if we ever get our money back from GM, and if this has just delayed the inevitible collapse of it somewhere in the future.

Not necessarily that far away. An IPO could happen by the end of this year that raises enough capital to redeem the US Gov't's ~60% interest.

[GannonFan]

So, we're still $45B in the hole in the GM deal, since the other $45B of the loan was retermed and made into actual ownership of the company. Plus, who's on the hook for the Old GM business that was carved out of this one and kept separate since that had all the losses and liabilities packaged into it? Is it just the non-union investors who got stuck with that decrepit asset or does that somehow come back to hurt the taxpayers?

Don't get me wrong, I'm fine with GM trying to dig itself out of the hole. Of course, the conspiracy folks will look at the troubles that Toyota had with the US govt right about the time that the US govt became the owners of GM and raise an eyebrow. But it's still a long way to go before we see if we ever get our money back from GM, and if this has just delayed the inevitible collapse of it somewhere in the future.

Not necessarily that far away. An IPO could happen by the end of this year that raises enough capital to redeem the US Gov't's ~60% interest.

And of course, the question begs, do we actually sell our stake when that happens. And my question about how the Old GM business was dealt with still stands - it's fine to say the New GM, conveniently shed of all its bad assets, is working right now - but who got stuck with the bill on the bad parts of GM that got thrown into that new Old GM?

[AZGrizFan]

Not necessarily that far away. An IPO could happen by the end of this year that raises enough capital to redeem the US Gov't's ~60% interest.

And of course, the question begs, do we actually sell our stake when that happens. And my question about how the Old GM business was dealt with still stands - it's fine to say the New GM, conveniently shed of all its bad assets, is working right now - but who got stuck with the bill on the bad parts of GM that got thrown into that new Old GM?

Probably their lenders. They got stuck with everything else....

[danefan]

Not necessarily that far away. An IPO could happen by the end of this year that raises enough capital to redeem the US Gov't's ~60% interest.

And of course, the question begs, do we actually sell our stake when that happens. And my question about how the Old GM business was dealt with still stands - it's fine to say the New GM, conveniently shed of all its bad assets, is working right now - but who got stuck with the bill on the bad parts of GM that got thrown into that new Old GM?

That's a question I don't have an answer to. But, my assumption is as you say - creditors (including pensions) got to hack away at it and get nothing. Just like the original shareholders got nothing.

My point remains - this may turn out to be a very profitable investment for the US government. Whether you believe the Feds should be investing in private industry is another issue as well.

[GannonFan]

Just saw this on ABCNews, so I'm assuming it's not really biased. I was a little skeptical about trumpeting GM repaying the loans since it didn't include the at least $40B worth of government aid that was used to purchase a share in GM stock. Now, it appears that the money GM used to pay off the $4.7B wasn't paid off using GM money, but instead it came from unused TARP funds - so basically, GM paid off a TARP loan with money from the TARP account.

At Thursday's Senate hearing, Collins asked Barofsky's deputy Kevin Puvalowski if GM simply had used TARP funds to repay TARP funds. "Yes," Puvalowski replied. "The source of the funds came from an escrow account that was funded with TARP funds in the first place. The vast majority of the taxpayers' investment in General Motors remains outstanding." "This is so frustrating to me," Collins responded, "because I think the public is being very misled."

http://abcnews.go.com/Business/general- ... 568&page=1

[OL FU]

Just saw this on ABCNews, so I'm assuming it's not really biased. I was a little skeptical about trumpeting GM repaying the loans since it didn't include the at least $40B worth of government aid that was used to purchase a share in GM stock. Now, it appears that the money GM used to pay off the $4.7B wasn't paid off using GM money, but instead it came from unused TARP funds - so basically, GM paid off a TARP loan with money from the TARP account.

At Thursday's Senate hearing, Collins asked Barofsky's deputy Kevin Puvalowski if GM simply had used TARP funds to repay TARP funds. "Yes," Puvalowski replied. "The source of the funds came from an escrow account that was funded with TARP funds in the first place. The vast majority of the taxpayers' investment in General Motors remains outstanding." "This is so frustrating to me," Collins responded, "because I think the public is being very misled."

http://abcnews.go.com/Business/general- ... 568&page=1

Sounds like it is time for a congressional hearing on truthfulness in advertising.


If you buy big three, buy Ford. Company accumulated significant debt (which is kinda scary) in order not to have to take government money. Put themselves at a tremendous competitive disadvantage considering the elimination of debt in the GM bankruptcy. Of course Ford seems to be doing the best of the big three so maybe there is such a thing as karma.

[GannonFan]

Just saw this on ABCNews, so I'm assuming it's not really biased. I was a little skeptical about trumpeting GM repaying the loans since it didn't include the at least $40B worth of government aid that was used to purchase a share in GM stock. Now, it appears that the money GM used to pay off the $4.7B wasn't paid off using GM money, but instead it came from unused TARP funds - so basically, GM paid off a TARP loan with money from the TARP account.



http://abcnews.go.com/Business/general- ... 568&page=1

Sounds like it is time for a congressional hearing on truthfulness in advertising.


If you buy big three, buy Ford. Company accumulated significant debt (which is kinda scary) in order not to have to take government money. Put themselves at a tremendous competitive disadvantage considering the elimination of debt in the GM bankruptcy. Of course Ford seems to be doing the best of the big three so maybe there is such a thing as karma.

I agree, Ford appears to have turned the corner and is competing well. Kinda makes you wonder why we are holding the bag on GM and Chrysler - either let them sink or swim on their own, apparently Ford has proven you can do so without a wholesale government takeover.

As for the congressional hearing, that will have to wait. I'm sure we still need to yell at Goldman Sachs for making money, or at least until we can push through a financial reform and pretend that said reform actually has a chance of preventing a similar economic meltdown in the future.

[OL FU]

Sounds like it is time for a congressional hearing on truthfulness in advertising.


If you buy big three, buy Ford. Company accumulated significant debt (which is kinda scary) in order not to have to take government money. Put themselves at a tremendous competitive disadvantage considering the elimination of debt in the GM bankruptcy. Of course Ford seems to be doing the best of the big three so maybe there is such a thing as karma.

I agree, Ford appears to have turned the corner and is competing well. Kinda makes you wonder why we are holding the bag on GM and Chrysler - either let them sink or swim on their own, apparently Ford has proven you can do so without a wholesale government takeover.

As for the congressional hearing, that will have to wait. I'm sure we still need to yell at Goldman Sachs for making money, or at least until we can push through a financial reform and pretend that said reform actually has a chance of preventing a similar economic meltdown in the future.

The congressional hearing on GM will be to pat them on the back for paying off that loan

[GannonFan]

I agree, Ford appears to have turned the corner and is competing well. Kinda makes you wonder why we are holding the bag on GM and Chrysler - either let them sink or swim on their own, apparently Ford has proven you can do so without a wholesale government takeover.

As for the congressional hearing, that will have to wait. I'm sure we still need to yell at Goldman Sachs for making money, or at least until we can push through a financial reform and pretend that said reform actually has a chance of preventing a similar economic meltdown in the future.

The congressional hearing on GM will be to pat them on the back for paying off that loan

Well, now that the cat is out of the bag that they didn't repay anything, I'm sure that just means there won't be a congressional hearing and we'll just hope that the feel good part of the disingenious announcement last week that they had will be all that people pay attention to.

[OL FU]

The congressional hearing on GM will be to pat them on the back for paying off that loan

Well, now that the cat is out of the bag that they didn't repay anything, I'm sure that just means there won't be a congressional hearing and we'll just hope that the feel good part of the disingenious announcement last week that they had will be all that people pay attention to.

Don't discount the ability of Congress to pat themsleves on the back with their own hands.

I realize there were lots of things to bash Goldman about but unfortunately the only part of the hearing I saw was Levin asking the Goldman CEO if he felt guilty about taking taxpayer money from AIG. The Goldman guy explained multiple times that he only took the money from AIG because the government gave it to AIG so AIG wouldn't default on obligations like the one it owed Goldman. He would have been just fine taking the money from the Insurance company that underwrote the AIG swaps. He was going to get his money regardless from AIG or the insurance company he didn't care which one. It was the goverments action that caused him to get the money from AIG. and Levin kept saying don't you feel guilty.

I immediately turned off the TV and thanked god I was not stupid enough to be a senator.