May 3, 2010

Those GM repayment TV ads are false and misleading

General Motors has been running ads on all the major networks claiming the company repaid its $6.7 billion U.S. government loan "with interest five years ahead of the original schedule."

General Motors Company CEO Ed Whitacre (pictured) can be seen in the ads walking through an auto plant as he touts the company's progress.

The problem is - the ad is false at worst and misleading at best.

GM says it repaid the remaining $5.8 billion owed to the U.S. Treasury and Export Development Canada despite announcing a $4.3-billion loss for the six-months following its emergence from bankruptcy as a U.S. government controlled company.

The repayment dollars haven't come from GM selling cars but, instead, from a TARP (Troubled Asset Relief Program) escrow account at the Treasury Department so it was really just an elaborate TARP money shuffle.

It’s no different than the proverbial “borrowing from Peter to pay Paul” which means taxpayers are still on the hook for what is still a GM bailout (using taxpayer funds) and the GM stockholders are still on the hook for a failing investment.

Link here and here.