The scam deepens

A Treasury Department press release on GM’s supposed repayment of its bailout debt gives no indication that it paid off only a fraction of its debt, and did so using untapped bailout funds:

The U.S. Department of the Treasury today announced that General Motors (GM) has fully repaid its debt under the Troubled Asset Relief Program (TARP). GM paid the remaining $4.7 billion of the total $6.7 billion in debt owed to Treasury. The repayment comes five years ahead of the loan maturity date and ahead of the accelerated repayment schedule the company announced last year. . .

“We are encouraged that GM has repaid its debt well ahead of schedule and confident that the company is on a strong path to viability,” said Treasury Secretary Tim Geithner.

In fact, GM “repaid” the $6.7 billion loan using other bailout funds in an $17.4 billion escrow account. Remarkably, the New York Times is on the story:

AS we inch closer to a clearer understanding of the products and practices that unleashed the credit crisis of 2008, it’s becoming apparent that those seeking the whole truth are still outnumbered by those aiming to obscure it. This is the case not only on Wall Street but also in Washington.

Truth seekers the nation over, therefore, are indebted to Senator Charles E. Grassley, Republican of Iowa, who in recent days uncovered what he called a government-enabled “TARP money shuffle.” It relates to General Motors, which on April 21 paid the balance of its $6.7 billion loan under the Troubled Asset Relief Program. . .

G.M. also crowed about its loan repayment in a national television ad and the United States Treasury also marked the moment with a press release: “We are encouraged that G.M. has repaid its debt well ahead of schedule and confident that the company is on a strong path to viability,” said Timothy F. Geithner, the Treasury secretary.

Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan.

Those are strong words from the NYT in favor of a Republican and against a Democrat.

But there’s more. Reading Grassley’s letter (at the bottom of the first page), it looks to me as though the scam is even deeper than reported. If Grassley has the facts straight, by “repaying” the $6.7 billion loan from escrow, GM unlocked another $5.1 billion in escrow funds which will now be turned over to GM.  So after the whole money shuffle, not only has GM not repaid a cent, but it actually ends up with more money in the bank.

So this is actually the exact opposite of what GM and the Treasury claimed. GM wasn’t repaying $6.7 billion; it was actually drawing a new $5.1 billion bailout.

(Via Hot Air.)

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