Looking back at some of the articles I have written in the past couple of years, I have to admit that I was fairly harsh on General Motors and Chrysler for taking government money to stay afloat. I thought they both
had unreal expectations of what the government should be doing to help them and I do not like the fact that even today, our federal government owns 61% of GM, with Canada owning 12%. That just seems wrong in every aspect, especially considering that both companies filed bankruptcy in the end. However, never let it be said that I was unwilling to give credit where credit is due. The Associated Press is reporting that GM CEO Edward Whitacre will announce today that GM has paid back $8.1 billion of the loans it received from the U.S. and Canadian governments.
GM CEO Whitacre will formally announce the loan paybacks Wednesday at the company’s Fairfax Assembly Plant in Kansas City, Kansas, where he will also announce that GM is investing $257 million in that factory and the Detroit-Hamtramck plant, both of which will build the next generation of the midsize Chevrolet Malibu.
GM got a total of $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments as it went through bankruptcy protection last year. The U.S. considered as a loan $6.7 billion of the aid, while the Canadian governments held $1.4 billion in loans.
The U.S. government payments, made Tuesday, came five years ahead of schedule, and Whitacre said they are a sign that the automaker is on its way toward reducing government ownership of the company. The payments on the Canadian loans were also made Tuesday.
Like I said, I have been pretty harsh toward GM and Chrysler in my writings, but I am pleasantly surprised to see this news. From what I can understand, GM has plans to pay back even more of the money, using a public stock option that may occur later this year. If they can pull this off and reduce our government’s ownership of the company, keeping themselves solvent at the same time, then I applaud their efforts.
UPDATE: It appears that I was too quick to give GM credit, as it seems they are paying back this $8.1 billion with money earned. Read the comments on this article for more information.
Larry I agree that it’s great to have GM paying back some of this money in an effort to lessen the Governments share. But don’t forget the president’s auto task force and Car Czar restructured GM to it’s liking. So my thought is that GM will always be run by the Government.
.-= USAWatchmen´s last blog ..Cedar Rapids Tea Party Media Coverage =-.
That may very well be true, but it is nonetheless good to see them paying back some of the money that bailed them out of trouble.
While this makes a good healine and story on the surface…How does using funds from an escrow account set up by the two governements translate into “repaying?” Sounds like more like returning.
I thought GM was required to payback the taxpayers through operating profits. Take one guess where the funds will come from when it comes time for Goverment Motors to address the severely undefunded pension.
The taxpayers will pay that bill again.
I was not aware that the money was coming from escrow accounts. The Associated Press made no mention of that in their story. Can you point me to more information about this?
Larry all I can say is I’m a Ford man!
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.-= John Carey´s last blog ..Joan Walsh: Playing Dumb about Leftwing Extremists =-.
Me too, John. I am now driving a 2008 Ford Edge, after my wife totaled our 2003 Chevrolet Venture.
I always knew you were a man of good taste. I have a 2005 Ford Escape. Before that I owned a 2001 Ford Escape.
.-= John Carey´s last blog ..Joan Walsh: Playing Dumb about Leftwing Extremists =-.
Ha, it’s funny how these conversations get started. Actually, It has been a long time since I drove a Ford product. Not sure why, but I have almost always driven a GM car or truck, just a Ford Taurus back in the 1990s. Before the accident, we had discussed getting a new vehicle and thought it might be a Ford, but had decided to keep the van and drive the wheels off of it. When she had the wreck, we began to look and made the decision to purchase the Ford Edge. I think I can honestly say it is the best vehicle I have ever owned, if it will hold up to the length of time we plan to keep it. If we take care of it, I see no reason it will not easily do that.
I’ve been a GM guy for most of my life. I’m a Ford guy now. The wife has a ’08 Fusion. Great car. It’s not as fun as my ’05 Grand Prix, but then again, GM killed Pontiac at the behest of the government. That did it for me.
Larry, it is all smoke and mirrors. GM still owes us–the taxpayer–$52 billion. The monies they paid back comes out of the original money given to them by the federal government last year (see my link).
Follow the money trail. There is no way GM made that much money to repay it out of their profits because they were still losing money.
If you need an independent source to verify this, The Wall Street Journal ran an opinion piece today by Paul Ingrassia noting the same:
http://online.wsj.com/article/SB10001424052748704133804575198262088791270.html
BTW, if you ever need a source to confirm something about the auto industry, pitch your question my way. I research everything and am currently writing for magazines in Wisconsin and Kansas as their automotive columnist.
.-= Matt Keegan´s last blog ..Alfa Romeo US Return Set For 2012 =-.
Thanks for the clarification, Matt. I should have done more research before I posted this article. It seems clear now that there is a lot of numbers manipulation going on and I should have verified everything before posting.