Social Question

Pretty_Lilly's avatar

How on earth was GM able to pay back the government the 5 Billion dollar bailout loan?

Asked by Pretty_Lilly (4655points) April 25th, 2010

+5 Billions dollars plus interest and to top it off; 5 years ahead of schedule.
How ? It’s not as the automotive industry is booming,is it because of Toyota’s recent demise ?

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37 Answers

janbb's avatar

I was wondering the same thing; will be curious to see if someone has the answer.

Pretty_Lilly's avatar

@janbb
*Maybe it’s something along the lines of: “wink” “wink” yes,we paid the loan,just ask the politicians in our pockets!

john65pennington's avatar

I think we all were amazed at watching that GM CEO commercial and the early payback. i am not sure, but maybe China had something to do with it. i will do a little more research and let you know.

Cruiser's avatar

Just because they were loaned all that money doesn’t mean they needed all of it or even used it all. Such was the case for many of the banks involved that didn’t want or really need all that money thrown their way. And that just allows the receivers such as GM to merely give back the money that was loaned to them.

john65pennington's avatar

Cruiser. do you think the Feds loaned this money to GM, so GM could just receive the interest from it? that maybe the money earned from the interest would the real reason for the loan in the first place?

Lets see, how much interest would be earned on 5 Billion dollars for 90 days?

Trillian's avatar

I saw this on the news yesterday. the money they got was in two separate baskets, and one of them they said that they didn’t need so they set it aside. They used that set aside money to pay back the rest.
I’m not kidding. MSNBC covered it yesterday morning.

marinelife's avatar

This MSNBC Article says this:

“Repaying the loan has been a top priority for Whitacre. The government’s autos task force set a repayment deadline of 2015 as a condition of giving GM the loans last year.

Liddell said earlier this month that GM could report a profit as early as this year. GM said it lost $3.4 billion in the fourth quarter of 2009 on revenues of $32.3 billion. ”

LuckyGuy's avatar

They renegotiated retirees medical and pension obligations. They did not pay some creditors. They also sold stock. (Shares of the company for cash)
That ad is simply good PR . Like the Toyota ads where they suddenly think about quality and safety.
Don’t worry. GM is still paying their big boys millions.

marinelife's avatar

The Miami Herald explains it this way:

“Essentially, GM no longer needs emergency government aid to stay afloat. While the taxpayer still has a sizable investment wrapped up in the automaker, GM has returned to decent health for the time being.”

dpworkin's avatar

They were able to drastically cut ongoing expenses, especially pensions and healthcare, they shut down a lot of marginal dealerships, and they continued to sell cars. They just had gotten way too big. Now they are the right size again. Obama forced them to shrink against their will, and it was a healthy thing to do.

janbb's avatar

Well – I do think it’s great that that loan and lots of the bank loans have been repaid. What will the Republicans bitch about next?

Cruiser's avatar

@john65pennington If you review the timeline of events many of the companies that were struggling were taking corrective action at the get go. The bailout took a very long time to implement and by the time they got the money many of these companies were seeing the results of the cutbacks they needed to do in the first place and maybe didn’t need all that money when it finally showed up. Sort of a too much too late kinda thing.

arpinum's avatar

They haven’t repaid all money the gov’t gave to them. The $5B was paid back with gov’t money from an escrow account they had at the treasury. Most of the money the gov’t lent to GM was converted into an equity stake. The gov’t is still $40B or more in the hole, though they will recover at lest some of that when GM has its IPO.
To clarify: GM is not repaying these loans with earnings, they are paying them with other TARP funds.

john65pennington's avatar

Cruiser. never thought of it that way. thanks.

Do you think the Feds would loan me about 5 million, so i can open a new casino in Kentucky? i promise to pay it back in about 6 months.

Captain_Fantasy's avatar

GM makes money the old fashioned way.
Prostitution.

dpworkin's avatar

I wonder if all you wingnuts will actually be disappointed if Treasury makes money on the auto bailout, which there is every reason to expect it will. What a bunch of fuckin’ babies. You lost the election. That happens. Why not join the party instead of actively working against the best interests of your own country?

arpinum's avatar

@dpworkin Treasury as of last week is satill not expecting to make money on loans to GM and Chrysler. Their current estimate is that they will lose $28 billion. The only place they are expecting to make a profit is loans to financial institutions.

Cruiser's avatar

@john65pennington Talk to your Senator! There is all sorts of pork money on the table…I’m sure you could work something out!

janbb's avatar

I just read that the Federal Reserve put 47 billion into the Treasury last year because of money it made on the housing loans it took over. Put that in your pipe and smoke it!

jerv's avatar

Personally, I think that with all of the scandals going on, many companies would slit their own throats to repay that loan and avoid the bad PR involved in taking the bailout money. It also frees them up to give out giga-bonuses without being crucified.

CodePinko's avatar

Irrelevant, as such logical questions were the farthest things from the administration’s collective mind.

CodePinko's avatar

Actually, why am I holding back?
Paying the people back was never Obama’s concern, instead he wants GM to be an effective arm of the state like Hitler’s Volkswagen.
Remember kids, Obama knows what’s best for you, this includes choices of personal conveyance.
The way congress thrashed the patient, respectful and dignified Mr. Toyoda was indefensible.

jaytkay's avatar

I see someone’s been over-indulging in AM radio and FOX again.

dpworkin's avatar

While forgetting to take his meds.

filmfann's avatar

Ed Whitacre used to be the CEO of SBC (now AT&T). He is a criminal, and should be prosecuted for stealing so much money from the company.
His top priority at GM has been paying back the loan, so he can justify more bonuses for the upper management. He acheived this by closing plants in the US. He is a thief, a succubus, and a flesh eating disease on the financial health of all he touches.

filmfann's avatar

Sorry, maybe I shouldn’t sugar-coat that.

CodePinko's avatar

So AM radio and Fox specialize in conservative and American interests. Oh the HORROR! they must both be total lie factories then!!!

marinelife's avatar

@CodePinko Well, it is clear that Fox is a total lie factory. As to AM radio, it depends on what you are listening to. If it is conservative talk radio, then there you have another bunch of total lie factories.

CodePinko's avatar

Even if that were true:
OH NO, I’m unable to observe and draw conclusions by and for myself!!
I’m completely reliant on the media to do my thinking for me!!

Fox and conservative radio aren’t total lie factories, they simply are concerned with issues you are not.

jaytkay's avatar

Fox and conservative radio aren’t total lie factories, they simply are concerned with issues you are not.

Like Obama’s Kenyan birth and “deep seated hatred for white people”, Vince Foster’s murder, death panels, Iraq’s WMD and its attack on the US on 9/11…

CodePinko's avatar

@jaytkay Just because Fox reports that these things are believed by some doesn’t mean they themselves as an organization believe them to be true. If people out there believe such things I want to know about it.
You’re smarter than that.

jaytkay's avatar

It’s not an accident that FOX viewers are, to put it kindly, badly informed.

…Fox viewers were almost four times more likely than public broadcasting’s consumers to hold misperceptions about the war

…72% of self-identified Fox News viewers believe the health-care plan will give coverage to illegal immigrants, 79% of them say it will lead to a government takeover, 69% think that it will use taxpayer dollars to pay for abortions, and 75% believe that it will allow the government to make decisions about when to stop providing care for the elderly…

…hosts and guests on several Fox News programs hyped a false assertion by Sen. Rick Santorum and Rep. Peter Hoekstra that weapons of mass destruction had been found in Iraq, despite the network’s own reporting that discredited the claim…

…75% of Fox News viewers believe false death panels claims…

And on and

CodePinko's avatar

@jaytkay : In the paragraph above take out the word “believe” and replace it with “don’t trust that _______ won’t” and you’ll understand we Fox viewers perspective.
Remember kids. POLLS ARE NOT TO BE QUESTIONED!!!!

jaytkay's avatar

OK, I understand believing lies, willful ignorance is a virtue to Fox viewers.

CodePinko's avatar

Disengenous. Moving on.

arpinum's avatar

@janbb $48B is not much of a shocker. The Fed turns a profit every year, IIRC it was $40B the year or two before the bailouts. Remember to keep a historical perspective. Also, the Fed gets to realize its gains on the MBSs now while a lot of the losses will still be down the road.

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