General Motor’s early repayment under fire

Republicans are criticizing the administration for hailing GM’s
repayment of $4.7 billion to the government last week.

The move was trumpeted by the Treasury Department, and Secretary Tim
Geithner on Tuesday highlighted the repayment as another sign that the
economy is getting back on track because of administration policies.

GM is also celebrating the news through a national advertising campaign.

What GM doesn’t say in the commercial is that the company still owes
tens of billions of dollars to the government, which exchanged the debt
positions it held in both GM and Chrysler for a blend of debt, equity
and preferred shares in the new companies that emerged from bankruptcy.

Treasury holds over $2 billion in preferred GM stock and 60.8 percent
of the company’s shares, which are not yet publicly traded.

Sen. Chuck Grassley (R-Iowa) has lashed out at the Treasury for its
announcement of GM’s repayment, and all but accused it of being
dishonest. He’s pointed to a TARP inspector general’s report that said
GM used TARP funds from an escrow account to pay off its TARP loan.

“The bottom line seems to be that the TARP loans were ‘repaid’ with
other TARP funds in a Treasury escrow account,” Grassley wrote in a
letter to Geithner.

“The TARP loans were not repaid from money GM is earning selling cars,
as GM and the administration have claimed in their speeches, press
releases and television commercials.”