GM & Chrysler Stiff Taxpayers 34 Billion
I came across an article in the News Gazette in Champaign, IL similar to ones running in newspapers all over America. The headline was “Treasury To Lose 1.6 Billion On Chrysler Loan.” Just another ho-hum-taxpayers-lose-again story.
There was a myriad of bad news figures in the story. It said the Treasury is writing off the 1.6 billion as a lost cause but it alerted the reader that it won’t stop there. The story continued, “Taxpayer losses from bailing out Chrysler and GM are expected to rise as high as 34 billion, congressional auditors said.” The reasons why were never made exactly clear.
I remember the positive spin on the stories about GM paying off their loans ahead of time just a few weeks ago. At the time I thought, does this might mean I was wrong about my criticism of the bailouts? Well, no I wasn’t. What actually happened was GM paid back 4.7 billion dollars to wipe the “loan” slate clean. To explain further, GM received 52 billion dollars in TARP money, but only 6.7 billion of it was considered “the loan part.” The rest of it, the 45.3 billion dollars that isn’t “the loan part” one can only assume is taxpayer tip money for doing such a great job running the American car industry into bankruptcy. That part they never have to pay back.
Just to pour salt into the wound, in hearings Senator Grassley observed that GM actually paid back “the loan part” by dipping into their other TARP funds they received. There was no great turn around, and it was certainly not the “huge accomplishment” Biden touted it to be. It’s just a rigged set of books courtesy of a pandering Congress. We’ll give you 52 billion if you promise to pay 6.7 of it back, and you can pay that out of the check we give you. Apparently the government knows the old instant rebate trick as well as the car companies do.
Since GM alone is forever short 45.3 billion and Chrysler will add to that number, it’s unclear how the projected loss can be a smaller number of 34 billion, but when dealing in government speak, there is rarely logic or mathematical sense involved. Just like Ms. Pelosi told us about the awaited numbers in the healthcare bill, they’ll let us know later what the numbers really are, but for now just go sit down and shut up (We’re the government and we can do this.).
So how are they doing? GM turned a first quarter profit of 865 million, and Chrysler lost another 197 million. Does it matter? Fannie and Freddie are still losing. We’re not getting the money back regardless of outcomes. The car companies will just join the other industries at the private slush fund party celebrating. The Fannies and Freddies
and Goldman Sachs and AIGs have learned it really doesn’t matter if you win or lose. It really is how you play the game.
The inside players and the governmental partners rake in personal fortunes in side deals, and management fees for bureaucratic oversight, and administrative fees for bank disbursement handling, and on and on. Plus they still get the their ridiculously high salaries and benefits. It‘s a guaranteed win-win, even if the corporate interests never recover.
As they say, when you get invited to a gamer of Poker, take a look around the table for an obvious sucker. If you don’t see one, you’re it. Or to make it easier, just look at the name tags. All will say “player” except the one that says “taxpayer”. Same thing.
I suppose while Katie Couric sadly laments the anger of the Tea Party, we’ll just have to grin and bear it until the total collapse of the nation, ala Greece style.
The question then will be, who bails us out?
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Sir, you are misinformed. The money that GM received was 51 billion. 4.7 billion was a loan. The loan portion was a working capital loan that was not needed to fund operations because of improving market conditions, so that was paid back plus interest. The government made money making that loan. The rest of the money, 46 billion was a stock purchase. The Gov’t OWNS 61% of the stock in GM. This 61% share will be sold in an initial public offering in late 2010 or early 2011. The experts expect that the government’s share of the IPO will generate somewhere between 50 and 60 billion which would end up being a substantial return on the investment. You are certainly entitled to your opinion on the government’s involvement in private industry, but you damage your own credibility when you misrepresent the facts.