Treasury Admits GM Repaid Loan Using Escrow
Grassley's belief was confirmed yesterday by Herbert Allison, US Treasury's assistant secretary for financial stability who, in a letter to the Senator, admitted GM properly used escrowed cash for the payment.
The only difference is that, unlike what Grassley said, the escrowed funds are held by the carmaker, and not the US Treasury. GM used this money to repay the loan after determining the cash wasn't needed for “extraordinary” expenses. Or, in other words, they asked for much more than they needed in the first place...
The senator, citing an auditor's report, says the money paid back this week come from the Troubled Asset Relief Program (TARP) and not from GM's earnings. An opinion somewhat backed by the financial results posted by GM for 2009: a $4.3 billion net loss, a global revenue of $57.5 billion and net cash coming from operating activities of $1 billion.
"This account was expected to be used for extraordinary expenses, and the fact that GM has decided that it does not need to reserve these funds for expenses is a positive sign for our overall investment,” Treasury spokeswoman Meg Reilly was quoted as saying by Autonews.
comments written so far
Nothing was paid off, and more is being borrowed. This is sad.