Economics

GM's Bailout Payback Claims: Untrue at Any Speed! Or, Wasn't It Supposed to be Used Car Salesmen Who Were Such Liars?

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Evidence continues to mount that GM and its government enablers are just full of malarkey when claiming that the taxpayer-owned automaker has paid back its bailout "in full and ahead of schedule." (Read Reason's first post on the matter here.)

Check out the video below, featuring Rep. Paul Ryan (R-Wisc.) for the lowdown.

Ryan, along with Reps. Jeb Hensarling (R-Texas) and Scott Garrett (R-N.J.), contacted Treasury officials to find out why they had claimed GM had repaid its debt in full. To which Treasury responded: "Treasury has never suggested that the loan repayment represented a full return of all government assistance." Which, among other things, is belied by an official Treasury press release titled, "GM REPAYS TREASURY LOAN IN FULL."

You can argue about semantics—that idiotic Ed Whitacre ad boasting about GM's repayment bona fides only implied that the makers of that Thalidomide baby of cars, the Pontiac Aztek, and the American answer to the Lada, the ultra-meltable '70s-era Chevy Nova Vega, had made themselves whole with the taxpayers—but that's a waste of time, given the larger picture.

And given the smaller picture, if the Competitive Enterprise Institute has anything to say about it. The free-market think thank has filed a deceptive advertising complaint with the Federal Trade Commission. Go here for details. CEI is no fan of the FTC as a concept but the group does have a sense of humor about such things. As CEI counsel Sam Kazman said, "If I applied for a car loan using GM's financially misleading approach, I'd be tossed out of the dealership on my ear." And, no doubt, into a nice, ultra-low-rate mortgage on a house he couldn't afford.

On Friday, we broke down the loan baloney for you at Reason.tv. Is there a catalytic converter for bullshit? Because that's what GM and Treasury seem to be running on these days.

Update: As noted in the comments, I confused the Chevy Nova with the Chevy Vega, the short-time set of wheels owned by my older brother in the 1970s.

Even More Update: Skip Oliva is fighting mad at CEI for legitimizing the FTC's existence, writing

You'll forgive me, but after spending the past 10 years listening to dozens of FTC victims tell me their stories about the agency all but destroyed their lives, I find CEI's actions beyond despicable. They've granted legitimacy to one of the worst government organizations imaginable, and they did it just to score some cheap PR points against GM. I don't recall CEI helping victims of the FTC battle their attackers; now I see them enabling these bastards. CEI has damaged the free-market cause today.

As I noted above, I think CEI's gesture is done with tongue firmly in cheek. But read Oliva's argument here.

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  1. They’re just using their Treasury Visa to pay off their Bailout Mastercard, is all. We do it all the time.

  2. We’re all over this!

    No we aren’t!

  3. Well it is Paul “I voted for TARP & am completely unrepentant of my vote” Ryan at it again. This guy has no shame or credibility on this issue.

    He ceded the right to criticized anything related to TARP with his yea vote and continued rationalization of his vote. Let us NEVER forgot that TARP was initiated by a Republican President and his GOP enablers in Congress.

    1. Exactly, Paul is a partisan hack.

      1. Paul voted for TARP back in 2008. However, Obama changed the rules once he was elected. The money was to go to banks only. Obama opened up the cash till and extended it to GM and Chrysler. He did this while ensuring the people that “he didn’t want to own a car company”. The WH was in cohoots with GM all along.

        This whole scenario looks similiarly familiar to the Health Care law. You get the President informing people that this is what we need. However, the bill contained only what the President and his Dmeocratic monions wanted. Now, they are trying to pass separate bills, which relate to the healthcare business. The doc fix will cost $276B, according to the new CBO scoring. This is 33% higher than what we heard from Debbie Stabenow (D-MI). Given this cost, not included in the “best comprehensive healthcare bill”, we will increase our federal deficit. However, the WH pulled a GM (or is it GM pulled a Healthcare Coupe?)

        1. Not to speak in defense of Obama, but the critical enablement was written into the original TARP legislation: the Secretary of the Treasury could use $700 Billion to buy anything he saw fit, at any price he saw fit, with no need for approvals or potential review. Prime blame goes to Bush for allowing the abuse. Secondary blame goes to Obama and Geithner for the abuse they performed.

          1. If I remember right, that was the original $487 Billion (not $700 Billion). The $787 Billion was the Obama ADDITIONAL bailout money. Primary blame goes to Obama. Bush shouldn’t have allowed the original bailout. But Obama now uses it as an excuse to take over GM, take over financial institutions, and without recognizing ANY part of the downturn being caused by the government. Ryan is correct.

            1. Actually you are getting really confused, Prime blame goes to Bush because as stated by CTObserver Bush wrote in the clause about using the money as the Fed sees fit, and part of it was used for the auto bailouts. Then a few weeks later (or earlier cause I don’t remember) obama passes a separate $787Billion Stimulus package. It was TARP (thanks Bush) that went to GM and Chrysler

              1. He needed to go back a bit farther than most are willing to go but Joe has a solid point.

    2. He ceded the right to criticized anything related to TARP with his yea vote and continued rationalization of his vote.

      I’m sorry, I don’t see how this logically follows. So you’re claiming that if Congress votes for something, then they can’t complain if they feel that the Administration isn’t executing the law as written? What a weird statement.

      Besides, you shouldn’t complain about his vote on TARP for this issue. You should complain about his vote on the auto bailout.

      I guess you’ve just ceded the right to criticize anything, by your rigorous standards.

      1. The TARP legislation never authorized the bailiing out of auto companies.

        The executive branch under both Bush and Obama did that.

        Interestingly, Obama has used as part of his defense of doing it that Bush initiated the GM bailout but he left out the part where he specifically asked Bush to do so when he visited the White House after the election but before Bush left office.

        1. He’s a persuasive fella!

    3. I’m just grateful that there’s someone in the government who won’t shut up about this. He’s certainly not pure in any sense, but I’m not that picky right now.

      1. You can be sure that none of the Democrats who control Congress will be hauling Whitacre before any hearings to grill him on his prevarications about it – seeing as how they probably put him up to it in the first place.

    4. Partisan much, Kevin?

    5. Kevin: I’m with you 100%. There is little difference between the progressive and progressive light choices we are constantly left with. Rule of law means less and less every day. The Individual becomes more and more subordinate every day through the machinations both major parties. Reps like Mr Ryan would do better to stay quite and be thought a fool than open his mouth and remove all doubt. Although I supose his words hold meaning to someone somewhere. At the end of the day these guys are all knee deep in corperate and social welfare entitlements and are so dependant on the machine they refuse to see reality.

    6. By your logic, the Democrats ceded their right to criticize anything related to the War in Iraq with their yea vote and their continued rationalization of their vote. Liberal double talk, when will it end. When will you hold your beloved leaders to the same standards.

  4. One thing that’s particularly outrageous to me is that this is a government owned enterprise using government money to lie to us. Frankly, people should wind up in jail for this. In reality, those who should wind up in jail will probably be given a promotion and a raise.

    1. And what is even MORE outrageous is that this occurs at the very same time Obama and his Democrats are going after Goldman Sachs for supposedly lying about their CDO products. Hey, why should private industry be any more honest than the government>

    2. But that’s just big business. Name one multi-national conglomerate that is 100% ethical, or even 80%. Tough thing to find.

  5. Ain’t BULLSHIT fun?

  6. If anybody really leans on them (an unlikely occurrence), they will undoubtedly engage in a lot of convoluted and lawyerly backpedalling about how they “refinanced” that loan.

    You certainly won’t see the SEC all over them for intentionally attempting to mislead the investing public in the run-up to their IPO.

    1. Are any morons actually going to buy GM’s new stock at their IPO?

      1. Dunno, but 300,000,000 bought into the bankrupt operation.
        I’d suggest we all fire the stock broker.

  7. “…the American answer to the Lada, the ultra-meltable ’70s-era Chevy Nova…”

    I’m speechless. As a long, long-term owner of a ’74 Chevy Nova, and having a tremendous amount of respect for Mr. Gillespie, I must assume he mis-spoke, and was referring to the 1985+ 5th generation Novas, which were rebadged Toyota Sprinters.

    The only thing that melted on the early ’70s Novas were the back tires when you dropped the hammer.

    1. Amen to that…

      The original 1970’s Nova was a good muscle car.

      Hell most of the old State Troopers, County Sheriffs, and shade tree mechanics down here in the South would swear that the old Novas were solid vehicles.

      It wasn’t until the 80’s that the Nova was turned into a piece of junk.

      1. I owned a used 1973 Nova from 1976-1982. It had a Toyota type gas pedal problem. When a Wisconsin wind chill made the temperature below zero, the gas pedal stuck to the floor. I could have been killed many times. Mechanics looked at the car, but couldn’t fix it. I felt too guilty to unload it on anyone else so I drove the car until January 1982. Then the driver’s door rusted off. I got to trade it in on new economy car with an offer to take any junk car for $500.

  8. I stand corrected: What I was recalling was my older brother’s oil-burning, engine-melting Vega, not a Nova at all!

    Apologies to all Nova owners. And condolences to all Vega owners.

    1. I guess you aren’t referring to the mid-late 80’s subcompact Chevy Nova. This was a joint venture with the Toyota Sprinter. Like the bailout payoff, they almost tricked me into believing this was a classic muscle car!

  9. I thank Nick for the link. I must respectfully disagree with Nick’s interpretation of the CEI complaint as “tongue in cheek.” The actual complaint reads completely straight. Take the CEI letterhead away and it could’ve easily been written by any number of pro-FTC groups. Just look at this conclusion:

    “A prompt investigation by the FTC would serve the American public on this issue of major consumer and taxpayer importance. It would also discourage other beneficiaries of government bailouts from falsely misrepresenting their status.”

    I don’t see any humor there. It’s a straightforward plea for FTC intervention.

    1. Any so called reporter or analyst that begins a report with “government enablers are just full of malarkey” is obviously not going to be fair and balanced. A respectable person within the media doesn’t name call or use any sort of insulting verbiage or tone. They just report the facts and information! Nick the Nice is trying to get hired at Fox Entertainment.

      1. Honestly, just kidding about the Fox part, went a bit too far. 🙂

  10. @S.M. Oliva

    It’s written by lawyers. Of course it’s going to read like, well, uh, a regular complaint submitted to the FTC. That’s. The. Point. This is CEI’s game.

    Remember this? http://cei.org/gencon/027,01460.cfm

    Get some context and lighten up.

  11. I had to watch that video twice because the first time I kept expecting Ryan to fly off or turn out to be Sylar.

  12. For anyone to have the gall to claim that GM paid back a taxpayer funded loan with a taxpayer funded escro fund is beyond belief and for our president to confirm it is shameful.

  13. Seems like all the DIMS. on this site can’t handle the trurh. Typical attack the messenger BS. Fascism is alive and well in the Democractic party.

  14. You say GM’s claim of government repayment is untrue, but you never explain why. You should have cited the entire amount the government invested and how much of that was converted to equity. You could also throw in the GMAC investments and FDIC guarantees of GM debt.

    1. do you really need that explained to you bernie?….

  15. Obama’s new GM ad agency dreamed up this outrageous lie. Used car salesmen.

  16. bureaucrats entrenched in federal,state, county,and city govt. will be directing tax dollsrs to GM at every oportunity at the expense of all competing bidders.most govt. workers are democrats.

  17. You have to admit that is pretty funny.

    Lou
    http://www.anonymous-web-surfing.cz.tc

  18. LOL, you have to admit dude that is pretty funny.

    Wa
    http://www.anonymous-web-surfing.cz.tc

  19. Ironically, the crony capitalism is a bastion of the GOP and here is a Republican calling for its end. The neo-cons have perverted the Free Enterprise mantra making lobbyists the most powerful people in Washington. Just look at the Clean Air Act, and the amendments sought by large corporations to exclude their pollution from the Act. There should never have been a bailout in the first place, Bush stepped on one of the key conservative beliefs in providing one, all in the name of keeping his buddies in business.

  20. They did repay their loan. What’s the problem?

    They’ve repaid the “debt tranch” and now the government only needs to collect on their “equity” or ownership tranch. Its really not a big deal.

    They’ll probably IPO next year and the gov will make 50-70% back on the rest of their money, and in the meantime have saved millions of current and former GM employees.

    1. No, they shifted money from one bailout account to another.

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  22. what’s a think thank?

  23. I think you people are getting indignant over something that nobody has said, that GM has paid back all their bailout help. The claim is that they’ve paid back their loan, in full, and ahead of schedule. That is true. Their total debt to the government has been reduced.

    No, the money didn’t come from earnings. Nobody said it did. They basically returned money that was loaned to them, because they don’t need it. That’s a good thing, and deserving of positive acknowledgment.

    But instead, you’ve all got your panties in a wad over imagined claims. Un-objective much? Agenda much?

  24. Technically GM and the treasury are correct. The LOAN has been paid back in full. Of course that isn’t the full extent of government assistance by a long shot because of the stock the government bought. The treasury release even mentions this in the last paragraph.
    Misleading, yes. Lying, no.

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