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Follow the Pea


GM’s repayment of Federal loans is a shell game:

You may have seen the announcement yesterday by GM’s CEO that it was paying back a portion of the money it had been loaned by the taxpayers (who borrowed it to loan it) to keep the company from going under and providing it the room for the government to own 61%.

Jamie Dupree brings us the rest of the story:

The issue came up yesterday at a hearing with the special watchdog on the Wall Street Bailout, Neil Barofsky, who was asked several times about the GM repayment by Sen. Tom Carper (D-DE), who was looking for answers on how much money the feds might make from the controversial Wall Street Bailout.

“It’s good news in that they’re reducing their debt,” Barofsky said of the accelerated GM payments, “but they’re doing it by taking other available TARP money.”

In other words, GM is taking money from the Wall Street Bailout – the TARP money – and using that to pay off their loans ahead of schedule.

“It sounds like it’s kind of like taking money out of one pocket and putting in the other,” said Carper, who got a nod of agreement from Barofsky.

“The way that payment is going to be made is by drawing down on an equity facility of other TARP money.”

Translated – they are using bailout funds from the feds to pay off their loans.

You supplied the pea. The Failed Obama Administration™ just moves the nuts around hoping you can’t keep up.

The amount repaid by GM is less than 13 percent of the $52 billion in federal bailout funds provided to the automaker. The remainder of the bailout was converted into stock, which GM still intends to pay off.

Government Motors tapped into a different pool of Federal debt to reduce the debt that appears in its own column of the ledger. It makes the GM operation appear more solvent, even though nothing of value was produced or realized. It is an accounting trick.

But, that’s what TARP was for. Accounting tricks. Moving debt around so some favored segments (banks, Fannie Mae, GM) can present a nice, clean and solid set of books.

But it is still your pea. And you, the productive taxpayer, will have to pay for it. Sooner or later.

H/T: Maggie’s Farm