A Republican senator is questioning General Motors’ claim that it has repaid its taxpayer-funded loans in full. Senator Chuck Grassley is asking Treasury Secretary Tim Geithner to justify those claims. According to the Iowa Republican, GM has repaid its TARP (taxpayer-funded bailout) loans using other TARP funds.
The automaker – which is 61 percent owned by the U.S. and 12 percent owned by Canada -- announced on Wednesday that has fully repaid the $6.7-billion in loans it received from the U.S. and Canadian governments.
“GM 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 we build here in Fairfax,” said GM Chairman Ed Whitacre during a visit to an auto plant in Fairfax, Kansas on Wednesday.
But as the Associated Press reported, GM received a total of $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments as part of its bankruptcy reorganization. The U.S. considered $6.7 billion of the $52 billion as a loan.
In fact, GM still owes $45.3 billion to the U.S. and $8.1 billion to Canada, money it received in exchange for shares in the company. GM said it hopes to repay those amounts with an eventual public stock offering, the AP reported.
“It looks like [GM’s] announcement is really just an elaborate TARP money shuffle,” Grassley said in an April 22 letter to Treasury Secretary Geithner. “The repayment dollars haven’t come from GM selling cars but, instead, from a TARP account at the Treasury Department.”
Grassley pointed to the most recent quarterly report from Neil Barofsky, the special inspector general for TARP.
Barofsky testified before the Senate Finance Committee this week that the funds GM used to repay its TARP debt are not coming from GM earnings.
“Instead, GM seems to be using TARP funds from an escrow account at Treasury to make the debt repayments,” Grassley said. The senator noted that according to Barafsky's testimony, "Treasury had supervisory authority over GM’s use of these TARP escrow funds."
Grassley questioned whether the Treasury Department is being straightforward with taxpayers about its management of the $700-billion taxpayer-funded bailout program
Grassley has been an outspoken critic about the lack of transparency with how TARP funds have been used. Last fall, he cosponsored legislation to end the program.
