From GM’s Ed Whitacre in the Wall Street Journal (link may require subscription):
The GM Bailout: Paid Back in Full
The investment of U.S. and Canadian tax dollars worked.
No Ed. The government ripped off disfavored creditors and dumped something like $45 billion into new GM stock. It then “cleverly” lent your company far, far more than it needed to get going after walking away from tens of billions of dollars in pre-bankruptcy debt.
Now we’re supposed to be impressed that your company paid back a bunch of money that has been parked doing almost nothing since it emerged from bankruptcy.
Big freakin’ deal.
UPDATE: No true accounting for the cost of the GM government bailout is complete without taking GMAC into account. The government in essence admits to that fact, as reported by the Associated Press on March 11:
The Treasury Department sank billions into auto finance giant GMAC Inc. without an exit strategy or proof the company was viable – a decision that could cost taxpayers $6.3 billion, a new watchdog report says.
… GMAC was treated more like banks that received bailouts without having to explain what they were doing with the money, the report says.
The report was released Thursday by the Congressional Oversight Panel overseeing the $700 billion financial bailout that Congress passed in October 2008.
“Treasury missed many opportunities to improve accountability and protect taxpayer money,” panel chair Elizabeth Warren said in a conference call with reporters. She said Treasury didn’t make GMAC show how it would return the taxpayer money, or how the investment would increase credit to consumers.
“These decisions mean that Treasury is now struggling to deal with a GMAC that is not financially rehabilitated, Treasury has no exit strategy and taxpayers are not fully protected,” Warren said.
The Treasury Department responded by reiterating that backing GMAC was necessary to preserve dealer financing for GM. It disputed the report’s core finding, that alternative approaches might have saved taxpayer money and provided better transparency.
Uh, the reference $6.3 billion is more than the $5.8 billion Whitacre reports having repaid. So taxpayer losses were shifted from one GM entity to another.
Again, big freakin’ deal.
UPDATE 2: Best comment at the Journal (bolds are mine) —
GM – in some form – was rescued by a bailout. So what? Missing in this analysis is any accounting for the time value of money. These funds were forcibly diverted for a period of more than a year from other potential investments. There is no proof whatsoever that this was the best use of those funds. Following this logic, we should just turn over all of our money to the federal government and let them pick the recipient of the politicians’ largesse.
Thanks, but I’ll take freedom. Let the failures fail. … stronger ventures will arise from the ashes.
UPDATE 3: This news may explain Whitacre’s timing (link may require subscription) –
Chrysler Reports $4 Billion Loss Since Exiting Bankruptcy
Chrysler Group LLC lost nearly $4 billion since exiting bankruptcy last year, but the company reported a first-quarter operating profit and increased its cash reserves, bolstering Chief Executive Sergio Marchionne’s claim that the auto maker will break even by the end of the year.
The auto maker lost $197 million during the first quarter and $3.78 billion for the period covering June 10 through Dec. 31 after the company had exited bankruptcy. Last year’s loss included a $2.1 billion charge for the company’s payment into the United Auto Workers health care trust fund.
… Despite the 2009 financial report, Mr. Marchionne said Chrysler has continued to strengthen its cash position and will achieve of its strategic targets outlined at the company’s headquarter in Auburn Hills, Mich. in November. Those targets included Chrysler breaking even on an operational basis and selling 1.1 million vehicles in the U.S.
… Revenue for 2010 is expected to range between $40 billion and $45 billion with earnings of $2.5 billion to $2.7 billion before interest, taxes, depreciation and amortization.
… Mr. Marchionne was no under obligation to release the financial results. However, he vowed to provide updates since he intends to return Chrysler to a publicly traded company in the future.
The invocation of “operating profit” is the kind of stuff Internet companies used to do during the dot-com bubble.