Sunday, May 02, 2010

Kissing frogs ... The auto bailout monty

By J. Thomas Duffy

It plays out like something from the old Wonderful World of Disney.

A friendly-looking, white-haired older gentlemen, speaking in a tone of a grizzled, wise-to-the-bone Midwestern small-town doctor, a bit self-effacing, before laying on the con ...

Here, watch it:

GM Repaid Government Loan Ahead of Schedule

Ah, not quite there, Ed, but thanks for coming and playing our game.

It's all a hustle!

Gretchen Morgenson uncovers all three of the Monty Cards in her piece today:

Repaying Taxpayers With Their Own Cash 

Truth seekers the nation over, therefore, are indebted to Senator Charles E. Grassley, Republican of Iowa, who in recent days uncovered what he called a government-enabled “TARP money shuffle.” It relates to General Motors, which on April 21 paid the balance of its $6.7 billion loan under the Troubled Asset Relief Program. 

G.M. trumpeted its escape from the program as evidence that it had turned the corner in its operations. “G.M. is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse,” boasted Edward E. Whitacre Jr., its chief executive.


Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan.


Mr. Grassley heard back from the Treasury last Tuesday. Herbert M. Allison Jr., assistant secretary for financial stability, confirmed that the money G.M. used to repay its bailout loan had come from a taxpayer-financed escrow account held for the automaker at the Treasury.

Even Snoozin' Larry Summers woke up long enough to work the con: 

What a difference a year makes. Just about a year ago, the American auto industry was on the brink of collapse. Today, General Motors announced that it has repaid its $6.7 billion loan to the U.S. government in full five years ahead of schedule, and Chrysler announced that, after taking one-time charges last year associated with its restructuring, it produced an operating profit in the first quarter of 2010 for the first time since the economic crisis began. The prospect of a faster than anticipated exit from government involvement and a return of most of the taxpayers’ investment in these companies has materially improved. 

This turnaround wasn’t an accident of history. It was the result of considered and politically difficult decisions made by President Obama to provide GM and Chrysler – and indeed the auto industry – a lifeline, if they could demonstrate the will to reshape their businesses and chart a path toward long-term viability without ongoing government assistance.

Holy Long Con, Batman!

Even Bernie Madoff, sitting in his prison cell, had to give himself a few headslaps after reading this today.

He was in the wrong racket.

If he only hooked into the government money pipeline ...

He had to be thinking about General Motors, taking over the Myra Langtry role in The Grifters with the government playing Roy Dillon: 

Roy Dillon: Maybe I like it where I am. 

Myra Langtry: Well, maybe I don't! I had ten good years with Cole, and I want them back! I gotta have a partner! I looked and I looked and believe me, brother, I kissed a lot of fucking frogs, and you're my prince! 

But Gretchen spanked 'em all: 

Of course, there is much joy in Mudville when a recipient of government aid repays its obligations. And it is also natural that the administration is keenly interested in reassuring taxpayers that losses on their bailout billions will be smaller than expected. Still, employing spin and selective disclosure is no way to raise taxpayers’ trust in our nation’s leadership. 

Pucker up, everybody!

Bonus Riffs

Mike "Mish" Shedlock: Oh Please, The GM Bailout Was A Failure, And No The Taxpayer Hasn't Made Money

What's Good For Tesla Motors ...

Top Ten Cloves: Great Things About Obama Taking Over General Motors

Breaking News! GM Cancels UAW In Favor of Adopting Huffington Post Business Model ...Celebrities, Auto Enthusiasts and Bloggers To Build Cars For Free ...Huge Spike In Profits Forecast

(Cross-posted at The Garlic.)

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