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Old May 10th, 2010, 08:14 PM   #1
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Default Oh Gee...feds acknowledge GM repaid loan with loan money

what complete and utter bullshit.
link
http://www.sfgate.com/cgi-bin/blogs/...id=62415&tsp=1

Quote:
Treasury says GM loan repayment was proper

A U.S. Treasury Department official acknowledged that General Motors repaid loans from the U.S. and Canadian governments with funds from those same governments, but said that was always the plan.

Last week, Sen. Charles Grassley, R-Iowa, said in a letter to Treasury Secretary Timothy Geithner that the loan repayment GM is touting in ads "appears to be nothing more than an elaborate TARP money shuffle."

Herbert Allison, assistant treasury secretary for financial stability, responded to Grassley on Geithner's behalf. In a letter, he said the loan was repaid from an escrow account at GM, not at the Treasury as Grassley had stated.

However, "The money used to fund the escrow account came from a portion of the proceeds of a loan made by both the Treasury and the Canadian goverment. The escrowed funds were expected to be used for extraordinary expenses, and a portion of the funds were so used," Allison wrote.

He pointed out that, "It has long been public knowledge that GM would use these specific funds to repay the Treasury and Canadian loans, if it did not otherwise need them for expenses."

Allison added, "In making its April 20 loan repayment, GM determined that it did not need to retain the escrowed funds for expenses. The fact that GM made that determination and repaid the remaining $4.7 billion to the U.S. govenrment now is good news for the company, our investment and the American people."

Allison did not say whether GM, in its ads touting the loan repayment, should have disclosed that it was repaying the government with government funds or that GM is still sitting on about $50 billion in taxpayer money that was originally a loan but later converted mostly to stock.

Allison did write, "As is widely known, Treasury continues to hold $2.1 billion in preferred stock and 60.8 percent of GM's common equity that it received in the restructuring in July 2009."



Read more: http://www.sfgate.com/cgi-bin/blogs/...#ixzz0nZislQWl
tim allen's comment on facebook
Quote:
Tim Allen It's so hard to not get angry at both General Motors and the compliant
Feds when I dive into this version of "we paid back our loan in full”
bullshit. You do your own research but you will find similar
information. Depending on how clear the writer is will depend on how
it’s understood. This attached article is understandable to me. It’s
crap and funky and makes me want to take a shower. These pinheads live
by another set of rules, and clarity & truth are foreign concepts.
It’s always versions of the
truth. They did not tell the truth.
They didn't pay anything off with their own money, which is how most
humans define “paid off a loan”, that is the truth. They all
should have to sit in a corner and have their mouths washed out with
soap.
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Old May 10th, 2010, 11:12 PM   #2
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I thought the GM commercial was full of shit.
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Old May 11th, 2010, 08:22 AM   #3
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It is hard to understand, especially in these days of such creative bookkeeping.

On one hand, the government totally bailed out GM with loan money (thank you, taxpayers ), however, the bulk of the money was converted to ownership with "stock" given to the government in exchange.

Now, the money sitting in GM's checkbook - even though it came from the government - is GM's money, as "stock" was given as compensation. The suits at GM see this as "our money" and not as a government loan because of this exchange. So - in their minds, using funds from this account to pay back the PORTION of original loans (not converted to "stock") plus interest to the US and Canada is completely legit.

Notice I use "stock" - as the government holds "shares" of GM that are essentially WORTHLESS compared to the money invested by the taxpayers - until GM goes public and can actually issues shares and start selling stock as a public company.

IMHO, publicizing the repayment was an attempt to show improvement and recovery here at GM, without having people trying to decipher "one time deduction for VEBA/restructuring/godzilladamage/etc" type B.S. that gets written off in earnings reports. The one thing they downplayed (IMHO) was the risk that GM was using government funds to pay back the government.

They will always be (theoretically) 60% of the government's funds as long as the USA holds "stock" in GM. I believe the initial attempt was to create a positive buzz to build upon for when the IPO launches later this year.
Unfortunately, I see it as digging ourselves a deeper hole to climb out of / "one step forward, two steps back" situation that GM suits completely missed before they started touting how great we were doing by paying back outstanding loans with interest.



Haven't seen the commercial - don't watch television - but I imagine that it could downright piss people off.
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Old May 11th, 2010, 08:28 AM   #4
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I think it's BS that they were giving money.

But I'm afraid if it didn't happen, things would be about 17x worse right now.
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Old May 11th, 2010, 09:17 AM   #5
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didn't the government say they would pull out of GM once the money was repaid? I have heard nothing about it. so I assume that too was another government lie.
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Old May 11th, 2010, 12:38 PM   #6
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Quote:
Originally Posted by clarkstoncracker View Post
I think it's BS that they were giving money.

But I'm afraid if it didn't happen, things would be about 17x worse right now.
Maybe in the short term it would be worse but in the long run giving money to a company that has proven that it cannot balance the books is a losing bet.

In the long run the resources would have been better off in the hands of those who had the capital to buy the remaining resources of GM and Chrysler from the court. Those companies would be up and running by now, making useful items that the market actually wants, hiring people, rebuilding industry from the ashes. Not needing billions of dollars from the tax payer to build products that no one will want to buy in a market that can't afford to buy them.

It's a shell game of hide the debt. It will come to an end and when it does, the pain will be much worse than if it had happened in 2008.
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Old May 11th, 2010, 12:49 PM   #7
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Seems to me that they took out a loan, then with that same money, repaid the loan. Whether it was money that was made or borrowed, the loan was paid. They didn't need it anymore so they gave it back.
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Old May 11th, 2010, 01:07 PM   #8
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Quote:
Originally Posted by 3-foot View Post
Maybe in the short term it would be worse but in the long run giving money to a company that has proven that it cannot balance the books is a losing bet.

In the long run the resources would have been better off in the hands of those who had the capital to buy the remaining resources of GM and Chrysler from the court. Those companies would be up and running by now, making useful items that the market actually wants, hiring people, rebuilding industry from the ashes. Not needing billions of dollars from the tax payer to build products that no one will want to buy in a market that can't afford to buy them.

It's a shell game of hide the debt. It will come to an end and when it does, the pain will be much worse than if it had happened in 2008.
X2

However there is a good chance the buyers could have been from overseas along with the jobs and profits.
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Old May 11th, 2010, 01:07 PM   #9
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Quote:
Originally Posted by Flexin' XJ View Post
Seems to me that they took out a loan, then with that same money, repaid the loan. Whether it was money that was made or borrowed, the loan was paid. They didn't need it anymore so they gave it back.

I give you a loan for $2000
you spend $1000
you decide that you don't need the other $1000 so you give it back to me and you claim that you have repaid your loan in full.

no you still owe me $1000.
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Old May 11th, 2010, 01:08 PM   #10
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Quote:
Originally Posted by Flexin' XJ View Post
Seems to me that they took out a loan, then with that same money, repaid the loan. Whether it was money that was made or borrowed, the loan was paid. They didn't need it anymore so they gave it back.
but looking at it that way, they did not give all of it back, only a portion of it that wasnt used...the rest was "paid" with stock in the company

I also dont like the fact that taxpayers money was given to a private company...any private company, or bank for that matter
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Old May 11th, 2010, 01:12 PM   #11
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Originally Posted by ovrlnd View Post
I give you a loan for $2000
you spend $1000
you decide that you don't need the other $1000 so you give it back to me and you claim that you have repaid your loan in full.

no you still owe me $1000.

The thing is GM paid the other $1000 of your scenario with $1000 worth of ownership. Had they barrowed from a private buisness that would have been fine IMHO, however now we have dabbled with partial goverment ownership of a once private company.

I will refuse to buy another gm/chrysler product new or used until the goverments hands are out of it. I also know I am not alone on this.
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Old May 11th, 2010, 01:15 PM   #12
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I still think they should have let GM go down and force a re-structuring of the unions to make them a little more competitive in the automotive field. Like McCain said " It was all about the unions. The Unions didn't want their very generous contracts renegotiated, so we put $80 billion into both Gm and Chrysler,...".
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Old May 11th, 2010, 01:16 PM   #13
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Quote:
Originally Posted by ovrlnd View Post
I give you a loan for $2000
you spend $1000
you decide that you don't need the other $1000 so you give it back to me and you claim that you have repaid your loan in full.

no you still owe me $1000.
The article didn't say they still owe money.
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Old May 11th, 2010, 01:18 PM   #14
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Quote:
Originally Posted by Flexin' XJ View Post
Whether it was money that was made or borrowed, the loan was paid. They didn't need it anymore so they gave it back.
Yes, that's what they did. No longer needing to sit on that money is a sign of progress, but not a demonstration that they are completely "fixed".

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Originally Posted by ovrlnd View Post
I give you a loan for $2000
you spend $1000
you decide that you don't need the other $1000 so you give it back to me and you claim that you have repaid your loan in full.

no you still owe me $1000.
That other $1000 now sits in your hands in the form of stock. That's what ScOoTeR was trying to explain. "Fixing" that situation is not as cut & dry as returning money that will no longer be needed, as suggested by Ovrlnd's comment about whether the Gov't will now pull out and sell the shares back.
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Old May 11th, 2010, 03:02 PM   #15
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Originally Posted by PavementPounder View Post
Yes, that's what they did. No longer needing to sit on that money is a sign of progress, but not a demonstration that they are completely "fixed".



That other $1000 now sits in your hands in the form of stock. That's what ScOoTeR was trying to explain. "Fixing" that situation is not as cut & dry as returning money that will no longer be needed, as suggested by Ovrlnd's comment about whether the Gov't will now pull out and sell the shares back.
if the government stay ownership forever then I agree. however the gov't said they would pull out immediately after they were back up protesting and assuring the american people that they had no interest in the auto industry.
if they pull out they should sell the shares back to gm and be done. then the loan would be paid in full. i have a feeling that the govt is just going to keep ownership. period.

but PP is correct it probably cannot happen right now. so the end result is a bullshit ad claiming that the money was repaid to try and increase sales.
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Old May 11th, 2010, 03:18 PM   #16
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Quote:
Originally Posted by ScOoTeR View Post
It is hard to understand, especially in these days of such creative bookkeeping.

On one hand, the government totally bailed out GM with loan money (thank you, taxpayers ), however, the bulk of the money was converted to ownership with "stock" given to the government in exchange.

Now, the money sitting in GM's checkbook - even though it came from the government - is GM's money, as "stock" was given as compensation. The suits at GM see this as "our money" and not as a government loan because of this exchange. So - in their minds, using funds from this account to pay back the PORTION of original loans (not converted to "stock") plus interest to the US and Canada is completely legit.

Notice I use "stock" - as the government holds "shares" of GM that are essentially WORTHLESS compared to the money invested by the taxpayers - until GM goes public and can actually issues shares and start selling stock as a public company.

IMHO, publicizing the repayment was an attempt to show improvement and recovery here at GM, without having people trying to decipher "one time deduction for VEBA/restructuring/godzilladamage/etc" type B.S. that gets written off in earnings reports. The one thing they downplayed (IMHO) was the risk that GM was using government funds to pay back the government.

They will always be (theoretically) 60% of the government's funds as long as the USA holds "stock" in GM. I believe the initial attempt was to create a positive buzz to build upon for when the IPO launches later this year.
Unfortunately, I see it as digging ourselves a deeper hole to climb out of / "one step forward, two steps back" situation that GM suits completely missed before they started touting how great we were doing by paying back outstanding loans with interest.



Haven't seen the commercial - don't watch television - but I imagine that it could downright piss people off.
I'm no financial expert but that sounds like money laundering.
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Old May 11th, 2010, 03:20 PM   #17
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I'm no financial expert but that sounds like money laundering.
My thoughts exactly.
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Old May 11th, 2010, 03:25 PM   #18
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if they pull out they should sell the shares back to gm and be done. then the loan would be paid in full. i have a feeling that the govt is just going to keep ownership. period.
Me too. Either that or demand a price that makes the bailout quite worth their while.

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but PP is correct it probably cannot happen right now. so the end result is a bullshit ad claiming that the money was repaid to try and increase sales.
I don't know that it was really bullshit. Did they not say they did exactly what they actually did? Its pretty much all GM can do at this point until the Gov't takes care of their end and agrees to get off the shares.
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Old May 11th, 2010, 03:49 PM   #19
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its just PR campaign... the ol'smoke and mirrors trick a roe
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Old May 11th, 2010, 06:43 PM   #20
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Originally Posted by ovrlnd View Post
I give you a loan for $2000
you spend $1000
you decide that you don't need the other $1000 so you give it back to me and you claim that you have repaid your loan in full.

no you still owe me $1000.
Not 100% accurate, as you would lay claim to 60% of the $2000 (or more) if I were successful in the business you loaned me the money for.

That 60% may be worth lots o cash, it may be worth nothing.
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