Hooniverse Weekend Edition: Hooniverse Asks; Do You Believe GM Re-Payed Their Government Loans?

General Motors announced last week that they have fully repaid their government loan, plus interest, five years ahead of schedule. I’m not so sure if that statement is correct, because the old GM (The ones with the toxic asset like Hummer, Saturn, Pontiac, and Saab) received a great deal of money from the government, and is unlikely to pay off that debt. Yes, the NEW GM, the ones with the not so toxic divisions of Cadillac, Buick, Daewoo and such looks to repay their part of the loan, of which is only a fraction of the total. So my question to you is this: Am I completely off base with questioning this, or should I just shut up and be happy for GM?

Here is a video that was shot during their initial bankruptcy filing.

Watch below as Chairman and CEO of General Motors Ed Whitacre talks about the repayment and touches on the future of GM. This commercial is on very heavy rotation at the moment, trying to convince you that GM is out of the woods.

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  1. Carman Avatar

    How about I borrow 60k for a new Vette, pay back 5k and call it paid it full? Liars !

  2. Morto Avatar

    NO. They moved money from one government filled bucket into another.

  3. Kii Avatar

    The GM bailout is like chemotherapy killing malignant cells(toxic assets) that divide rapidly and would kill the host if left to do there dirty work. As in chemo this means that it also harms healthy cells that should be dividing rapidly under normal circumstances like we might see in a healthy free market. Its annoying that GM got this cancer as a consequence of there own bad habits.
    As to weather this treatment worked and the hospital got paid, to soon to tell. So far it has kept the patient alive, given the number of jobs at stake and the importance of us actually building stuff here I guess thats a good thing. They have made payment on there bill looks like they covered the amount due and mailed it a little early but we will have to wait for the Gov's 60% stock stake to be sold to see if the hospital gets paid in full.
    Worrisome that so many public hospital render uncompensated care. They do help keep people alive.

  4. dmilligan Avatar

    When I heard that GM had paid off its TARP loan so soon I was surprised and thought "If they were that close to being flush, why did they need the loan to begin with?". It sounds likely that GM is playing silly buggers with its accounts again to prop up its image. What a bunch of plonkers.

  5. Ermott Avatar

    GM will never pay back it's loans because in today's reality, it doesn't have to. (Some of the first money GM received went to finance an engine plant somewhere in South America, if I remember correctly)
    Private profits and public risk. The banking industry pioneered these tactics with the SNL crisis.

  6. Darkman.au Avatar

    ugly, but still better than exporting the jobs to China and importing the cars back in.

  7. rocketrodeo Avatar

    There is a lot of politics being played with what happened, on both sides of the aisle. They should both shut up, because it's making them both look stupid. GM used an equity capital account to pay their loan that was set up for just this purpose. AIG has one too; in fact, they're REQUIRED to use it this way if they can't pay with earnings. Debt-to-equity swaps are a time-honored way to reduce debt, and I doubt you'd get any disagreement, in private, from finance-savvy republicans whether or not the procedure was legit. I'm glad that GM feels like they can free up enough capital for debt service (esp since the loan wasn't to term by a long shot) rather than use it for, say product development. It's probably a good sign.
    Two other motivators: One, the loan was costing them sales, at least among folks who buy cars based on politics rather than economics. Two, it reduced their exposure to the "TARP tax." Given that I consider it a moral imperative to keep my own taxes low, I have trouble not being on board with that one.

  8. lilwillie Avatar

    Why pencils have erasers and accountants love numbers. Slight of hand and poof, it is gone.

  9. Saturnsufferer Avatar

    Shameless accounting tricks, sad really.

  10. soo΄pәr-bādd75 Avatar

    I don't completely understand how bankruptcy works, and as such the whole New GM/Old GM is kind of hard for me to sort out. All I know is that GM got 60-something billion dollars and paid back 6 billion of it. Old GM/New GM, it doesn't really matter to me. I have a hard time believing that their loan has been paid in full, but that's just me.

  11. P161911 Avatar

    They repaid their "loan" from the government with money the same government GAVE them. Doesn't give me a warm fuzzy feeling.