GM Repaid the US with US' Own Money, Senator Says

The five-year-ahead-of-schedule repayment of the federal loans received by GM last year has stirred, aside from the official "we're very pleased" position adopted by government officials, quite a debate concerning the way in which GM managed to come up with such a large amount of money ($4.7 billion) for the US alone) in such a short amount of time (in under a year since it entered bankruptcy).

According to Republican senator Charles Grassley of Iowa, GM managed to do nothing. In his opinion (an opinion shared not only by Grassley) GM did nothing but take the money from Treasury's left pocket and put it back into its right pocket.

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.

“It is unclear how GM and the administration could have accurately announced yesterday that GM repaid its TARP loans in any meaningful way," Grassley said in a letter to Treasury Secretary Timothy Geithner, cited by Autonews.

“The taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government's ability to sell GM stock in the future."

The Treasury on the other hand claims this is entirely true, as GM paid from its own cash account, which in turn is a part of the US investment in the carmaker...

"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 the source.