The Obama Administration and GM announced the full repayment of bailout funds, with GM crowing about how they paid off the bailout five years early. There are also tv commercials with the CEO proudly talking about the repayment, emphasizing it was paid with their own profits.
Interestly enough, there are reports that the 'profits' that were used were actually from the TARP escrow account. They used TARP money to pay back TARP money (plus interest - does that even count?). And then bragged about it:
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. When these criticisms were put to GM’s Vice Chairman Stephen Girsky in a television interview yesterday, he admitted that the criticisms were valid:
Question: Are you just paying the government back with government money?
Mr. Girsky: Well listen, that is in effect true, but a year ago nobody thought we’d be able to pay this back.
Yes, Mr. Girsky, nobody thought you'd be able to pay it back, and YOU STILL HAVEN'T.
This is sheer insanity. More importantly, it is a stunning example of the smoke and mirror techniques this administration is relying on to dupe the American people.
When do you think they will pull the ads? I'd say pretty soon...
If this little scheme is successful, GM and the administration will look like they closed out the bailout issue, and thus can distance themselves from the stigma. GM would have the added benefit of presenting a facade of success. After the poll that came out this week showing that Americans prefer American cars, this would make it look like GM is a force in the industry again. They are alluding that the payoff money came from booming sales - a complete fallacy.
The best metaphor I've heard is that this is like paying off your visa bill with your mastercard and bragging about your financial condition.
But wait, there's more. According to Sen. Charles Grassley (R-IA), any remaining funds in the escrow account would be paid to GM upon 'repayment' of the bailout funds. Using the same metaphor as before, that's like Mastercard now forgiving the balance and, additionally, loading up the card with a few billion in funds as a thank you gift because you are just so awesome.
In a classic case of "Who left the irony on", the administration is going after Goldman Sachs for shady bookkeeping. Whose case, by the way, might be similar to GM's. Much like the smoke and mirrors of the GM 'repayment", the financial reform bill is smoke and mirrors for Government Sachs. It is also cover for the adminnistration, to give the appearance of cracking down on the evil fat cats of the financial sector while in reality giving them practically unlimited bailout capabilities. Goldman Sachs is willing to take the heat because in the end they will have a multi-billion dollar slush fund to draw from.
This administration is nothing but double dealing and deception. Call it what you will - shell game, bait and switch, or business as usual - GM is just another example of it.
Remember in November.