GM pays off its bailout loans

[92merc]

http://money.cnn.com/2010/04/21/autos/gm_loan_repayment/index.htm?hpt=T2

 

It's officially official. GM no longer owes the US taxpayer any more on its loan money...

[RichardJensen]

GM PAID THOSE LOANS OFF WITH US MONEY!!!!!!!!!!!!!!!!!!!

 

(just so everyone knows).

 

The government gave GM a $16.7 BILLION escrow fund when it exited bankruptcy last year. It is paying off its outstanding loans with that fund.

 

So, yes, that means that US tax dollars just got sent to Canada, and that US tax dollars will probably be used to pay off an outstanding loan from the EU as well.

[RangerM]

http://money.cnn.com/2010/04/21/autos/gm_loan_repayment/index.htm?hpt=T2

 

It's officially official. GM no longer owes the US taxpayer any more on its loan money...

From the article.....

But the loan money is only a fraction of the financial support that the federal government gave to GM over the past 12 months to stop it from going out of business.

 

Overall, GM received $50 billion in federal help. In return, the government got $2 billion in preferred stock and 61% of the company's privately held common shares.

 

Taxpayers could recoup money from a possible sale of GM stock to the public in the future.

[TopCat501]

I thought this article had some good insight into the payoff by GM. Even the user comments are spot on IMHO

 

http://www.fool.com/investing/general/2010/04/21/general-motors-still-owes-you.aspx

 

A case of blue oval envy

Simply put, Whitacre clearly believes that the stigma attached to the bailout has hurt the company's business. Or, more to the point, that the lack of stigma attached to Ford (NYSE: F), which famously declined TARP aid at the peak of the crisis, has been a big factor in the Blue Oval's dramatic success of late

[forddaughter]

WOW! They are playing the commercial like crazy. Kept flipping channels this evening and their commercial was on at least 4 stations at once.

[suv_guy_19]

So, yes, that means that US tax dollars just got sent to Canada

 

 

Ummmm....no...Canadian and American tax dollars were just recycled.

[ANTAUS]

I saw the commercial a little while ago...WOW...in politics we always say "if your explaining yourself, your losing"...and that commercial just drove that point home for me.

[BlackHorse]

LOL. Yep, they are running that TV spot and around here they also have a radio commercial bragging about paying off their loans. They know that many customers have refused to buy their products since they took all of that bailout money on the taxpayers dime (Like me). It has hurt their business and now they are trying to improve their reputation with the public. But the fact remains that uncle Obama and Co. are still calling the shots and both GM and Chrysler and so long as they are I don't think anyone should buy their cars.

[jpd80]

GM PAID THOSE LOANS OFF WITH US MONEY!!!!!!!!!!!!!!!!!!!

 

(just so everyone knows).

 

The government gave GM a $16.7 BILLION escrow fund when it exited bankruptcy last year. It is paying off its outstanding loans with that fund.

 

So, yes, that means that US tax dollars just got sent to Canada, and that US tax dollars will probably be used to pay off an outstanding loan from the EU as well.

 

So GM is paying off a loan(s) by spending cash from another loan?

 

why does this not surprise me.....

Edited April 22, 2010 by jpd80

[weiweishen]

http://money.cnn.com/2010/04/21/autos/gm_loan_repayment/index.htm?hpt=T2

 

It's officially official. GM no longer owes the US taxpayer any more on its loan money...

GM received $52 billion from the US government in bailout money but has only paid back $6.7 billion. How then is this being reported as "repayment in full 5 years ahead of schedule?" Only $6.7 billion was technically considered to be a loan. The rest of it was the government buying GM stock when it was falling like a rock and no one else would. The government's decision to ignore contract law and blowout the bondholders GM owed money to also helped.

 

The new GM would have to IPO at a market cap greater than presently profitable Ford (F) in order for the government to no longer be a majority shareholder, a highly unlikely scenario within the foreseeable future.

 

Reporting this as repayment in full without explaining these crucial details is mischaracterization at best and a bold faced lie at worst.

[RichardJensen]

So GM is paying off a loan(s) by spending cash from another loan?

Technically, the escrow fund was not a loan.

 

But for GM to act as though they're paying off these loans with profits generated by the business.... incredibly deceptive.

 

The government's decision to ignore contract law and blowout the bondholders GM owed money to also helped.

 

Be careful there. There were no laws broken in the GM bankruptcy settlement. Bankruptcy law leaves those matters up to the bankruptcy judge. In GM's case, bondholders who expected to get first dibs on all the cash that the government dumped into GM during the first half of 2009 were sorely disappointed, but there was no mandate that money be given them.

[kstwister]

I just love how much money a person or company suddenly starts "making" after they file a BK and generally f@ck all the creditors involved. I don't really know the math on this deal nor do I really care to. But, I wonder of these supposed repayments would have even serviced the debt on their balances before? Just makes me wonder if they can handle themselves even now and manage the debt they exited the BK with. It'll be interesting. I hope the US gov't and all of us as taxpayers get that money back but I couldn't give a shit about GM. End of rant.

[weiweishen]

Technically, the escrow fund was not a loan.

 

But for GM to act as though they're paying off these loans with profits generated by the business.... incredibly deceptive.

 

 

 

Be careful there. There were no laws broken in the GM bankruptcy settlement. Bankruptcy law leaves those matters up to the bankruptcy judge. In GM's case, bondholders who expected to get first dibs on all the cash that the government dumped into GM during the first half of 2009 were sorely disappointed, but there was no mandate that money be given them.

 

I really curious about how many people want to buy GM stock after GM IPO. GM need to issue stock with market cap of 46billion. Ford market cap is $46.57B at 13.89$ per share now. GM future stock's starting price can not be lower than 13.89 if they want to issue same amount of stock as Ford has right now. Besides, Ford has turned to profitable and GM just predicted that they still have chance to get profit in 2010. who knows? Now let us look at delta airline that also out of chapter 11 on 2007. Delta airline stocks have never passed 20 dollars per share since out of chapter 11. So I really don't see too much profit space at all from GM furture stock unless some one can convince me that GM is much more valuable than Delta Airline that is the biggest airline in US.

So many people's stock and debts were wipe off immediately. This impression is difficult to be wiped off from public image very soon regardless how fast GM paid off the fraction of money they took from tax payer. If I filed for bankcrupcy, my credit report will hang red flag on me for at least 10 years.

[NickF1011]

So many people's stock and debts were wipe off immediately. This impression is difficult to be wiped off from public image very soon regardless how fast GM paid off the fraction of money they took from tax payer. If I filed for bankcrupcy, my credit report will hang red flag on me for at least 10 years.

 

Especially since a lot of that stock and debt were institutionally owned by the same companies that GM would be expecting to invest in their IPO. I think it'll be awhile before we see it go public.

[BlackHorse]

Just found this on left lane news

 

http://www.leftlanenews.com/top-republican-questions-gm-administration-over-tarp-funds-used-to-pay-back-loans.html

 

Senator Charles Grassley accused both the Obama Administration and GM of misleading taxpayers about the true status of the automaker’s government-sourced loans. Grassley accused the automaker of using funds from a different part of the government funded bailout in order to pay back its loans.

 

This makes me not want a GM "even more" because not only did you not really pay back the loans, you lied about it to the American people.

Edited April 23, 2010 by BlackHorse

[jpd80]

Technically, the escrow fund was not a loan.

 

But for GM to act as though they're paying off these loans with profits generated by the business.... incredibly deceptive.

 

Ah, so that Escrow fund was set up so GM could pay certain accounts, maybe some loans(?)..

Is this the Government helping GM improve the perceived value of the company ahead of the IPO?

 

If the government was somehow able to get investors to believe GM is improving

then maybe the US taxpayers get back all of their loan money and some profit too....

 

But I'm getting ahead of reality here...

Edited April 23, 2010 by jpd80

[RangerM]

Ah, so that Escrow fund was set up so GM could pay certain accounts, maybe some loans(?)..

Is this the Government helping GM improve the perceived value of the company ahead of the IPO?

 

If the government was somehow able to get investors to believe GM is improving

then maybe the US taxpayers get back all of their loan money and some profit too....

 

But I'm getting ahead of reality here...

The U.S. Government attempting to dupe investors or the public at large?

 

Shirley you jest.

[Ron W.]

The U.S. Government attempting to dupe investors or the public at large?

 

Shirley you jest.

 

 

No jest and don't call me Shirly.............

 

Hey, somebody had to do it, Airplane, good movie. :stats:

[weiweishen]

http://money.cnn.com/2010/04/21/autos/gm_loan_repayment/index.htm?hpt=T2

 

It's officially official. GM no longer owes the US taxpayer any more on its loan money...

http://online.wsj.com/article/SB10001424052748704133804575198262088791270.html?mod=WSJ_Opinion_LEFTTopOpinion

GM is making progress. But its early loan repayment represents a little more than 10% of the money it got from both governments. Understanding why means peering under the hood of last year's government-sponsored bailout and bankruptcy.

 

It was both a financial and a political decision. Financially, saddling the new GM with lots of debt might doom the company to Failure 2.0. If the new GM collapsed after the government pumped in tens of billions of dollars, the political fallout for the Obama administration would be enormous. (Being tarred with bailout was bad enough.)

 

So the U.S. and Canadian governments decided, more or less arbitrarily, to classify some $6.7 billion of its aid as debt and a ballpark estimate of $52 billion in equity. That $52 billion represents nearly 90% of the government money given to General Motors. None of that has been repaid.

 

Mr. Whitacre should have acknowledged that directly. He would have enhanced the company's credibility compared with the old GM, which seemed to declare victory every other week even in the face of disaster

 

Getting the remaining $52 billion back from GM will require an initial public offering, which means convincing the investing public to buy the 73% of the company's stock owned by the U.S. and Canadian governments. (The other 27% is owned by the United Auto Workers union and by bondholders in the old company.)

 

It won't be easy for an IPO to raise $52 billion for the government shares. That's more than Ford Motor's current market capitalization, some $48 billion. And Ford, the only U.S. car company to avoid bankruptcy, already is profitable, which GM isn't. For GM to show sustained profits means doing business in a new way and breathing new life into long-moribund brands.

Edited April 23, 2010 by weiweishen

[AlRozzi]

From what I've been reading;

 

Ed Whitacre wants to get sales up at GM in a hurry. He spent some time this month talking to managers and dealers about what GM can do to increase sales. Ed was told by everybody that there are some who won't buy GM because they are using our money to stay in business so the best way to increase sales was to make people believe GM has given back all the money.

 

Ed decides to transfer bailout money put into a fund called "escrow" and apply it to bailout money called "loan." Once complete, Ed goes on television to tell the American people that the loan has been repaid. He gets the media to plaster the headline everywhere and government officials to congratulate GM on "paying back their loan."

 

Ed's marketing job is done! Now the American people believe GM has repaid the bailout /taxpayer money.

[jpd80]

Getting the remaining $52 billion back from GM will require an initial public offering, which means convincing the investing public to buy the 73% of the company's stock owned by the U.S. and Canadian governments. (The other 27% is owned by the United Auto Workers union and by bondholders in the old company.)

 

It won't be easy for an IPO to raise $52 billion for the government shares. That's more than Ford Motor's current market capitalization, some $48 billion. And Ford, the only U.S. car company to avoid bankruptcy, already is profitable, which GM isn't. For GM to show sustained profits means doing business in a new way and breathing new life into long-moribund brands.

IMO, GM is now has roughly the same production output as Ford, I wonder whether Ford's market cap is still an understatement of where they are, I believe they should be a $73 billion company like GM but without the debt...

[TopCat501]

Good Gawd!

 

Is this legitimate?

 

GM Could Be in Hot Water With FTC Over Truth in Advertising

 

http://www.foxnews.com/politics/2010/04/23/gm-hot-water-ftc-truth-advertising/

[RichardJensen]

In a word: Yes.

 

Claiming that taxpayers have been reimbursed in full is exceedingly deceptive.

[7Mary3]

Did GM pay off it's government loans? Sure, if you say so! Remember that the bulk of the money that the government poured into GM was NOT in the form of loans, but an equity stake. Ostensibly, the government will be 'paid back' after the 'New GM' IPO when the government decides to sell it's shares. Will the government get all it's money back? Your guess is as good as mine. I say probably not. The government bailed GM out, and most of it was NOT in the form of a loan. It was an equity stake. We all own GM at this point, like it or not. The problem is that the only way there is any hope of getting OUR money back is for GM to become wildly successful. So, the only thing we can do is buy GM cars. Lots of cars. It really is our only hope.

[BlackHorse]

Did GM pay off it's government loans? Sure, if you say so! Remember that the bulk of the money that the government poured into GM was NOT in the form of loans, but an equity stake. Ostensibly, the government will be 'paid back' after the 'New GM' IPO when the government decides to sell it's shares. Will the government get all it's money back? Your guess is as good as mine. I say probably not. The government bailed GM out, and most of it was NOT in the form of a loan. It was an equity stake. We all own GM at this point, like it or not. The problem is that the only way there is any hope of getting OUR money back is for GM to become wildly successful. So, the only thing we can do is buy GM cars. Lots of cars. It really is our only hope.

 

 

Pass

 

Here's another idea. GM can go into arbitration like they should have when all of this got started. They can re-negotiate the UAW contract and actually emerge from bankruptcy a better, leaner more efficient company than before instead of a bloated bureaucratic subsidy that is kept afloat by tax dollars.