I knew there was something screwy about that $6.7 billion loan GM said it paid off. They made a big show of it, announcing that they were going to announce it, then announcing it, then running a commercial announcing it again. I believe the story made the front page of the Journal, a sign that taxpayer money wasn’t wasted on a failing enterprise.
Ha! As the Times’ Gretchen Morgenson reports, GM paid off the loan with funds from a taxpayer-financed escrow account at the Treasury, not because people are out there snapping up Camaros (although I have to say, the new Camaro is the best-looking car to come out of Detroit in decades.) From Morgenson’s story:
Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan.
Neil M. Barofsky, the inspector general overseeing the troubled asset program, revealed this detail when he spoke before the Senate Finance Committee on April 20.
“So it’s good news in that they’re reducing their debt,” Mr. Barofsky said of G.M. But he went on to note that G.M. was using other taxpayer money to make the loan repayment, according to the transcript of his testimony.
Does that just beat it all? All that show, all that crowing, and all they were doing was shuffling some money around. And we still hold $2.1 billion in preferred shares and 61% of the common, the acquisition of which essentially was another bailout.
General Motors once upon a time had something like a 50% market share, maybe even more. Not the U.S. market – the world market. Today the company is a shell of itself, a pale shade of the glory days, the days of shark-fin tail lights and white-wall tires. And while I personally think some of the cars it makes are really nice, like the new Malibu and the Camaro, I just wonder if too much damage has been done for the company to ever really recover, and if somewhere down the line we’ll be confronted again with a choice of either bailing the company out again or letting it go the way of the Edsel.
Did GM have a near-death experience, or did it actually die and we’re just animating a corpse? Maybe all we bailed out was an image of that old GM, back when it ruled the world. But those days are gone for GM, and they’re not coming back. And if Americans don’t start facing up to the very real issues surrounding them, the glory days for the nation will pass just as surely.