Vail Daily letter: … Peter to pay Paul
Vail, CO, Colorado
Re: Our World: GM repays $8.1B million in government loans.
I was watching the GM TV ad in which their CEO was announcing this repayment, and was thinking “Wow! That’s impressive. Things must be working better.”
I switched to business news, and Neil Cavuto happened to be interviewing Neil Barofsky, treasury special inspector general of TARP. Imagine my surprise when I watched the following exchange:
Barofsky: “Well, it’s good news they’re paying back the loan. The one thing a lot of people overlook with this is where they got the money to pay the loan. It isn’t from earnings. They didn’t earn an extra $4.5 billion. It’s another pool of TARP money. So there’s money in escrow.”
Cavuto: “Wait a minute, they paid off a credit line with another credit line?”
Barofsky: “Exactly so.”
Cavuto: “Why are we bragging about that?”
Barofsky: “Well, it’s somewhat good. It’s good in that we …”
Cavuto: “You paid off one credit ..”
Barofsky: “Absolutely. They already have the money in the escrow account, so it lessens the total they owe to the government, so that’s somewhat good news. But I don’t think we should exaggerate it. It’s just other TARP money.”
Both Biden and Obama jumped on the payback announcement as some kind of affirmation of their policies. It is nothing of the sort. GM simply used one pool of our tax dollars to pay off another loan of our tax dollars.
The GM ad is misleading (I think untruthful) and the statements by the vice president and president indicate they simply don’t know what is going on. By the way, the interview was predominantly about the mortgage bailout program, which is not going well.
John A. Valersky