Senator: GM paid U.S. federal loans with other federal money

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A Republican senator said that General Motors’ payment of federal loans this week was nothing more than a “money shuffle” and said that the company paid federal loans with other U.S. funds. Sen. Charles Grassley of Iowa, a senior Republican on the Finance Committee, cited an auditor’s report that GM payment was coming from U.S. Troubled Asset Relief Program funds in an escrow account, rather than from GM earnings.

“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 U.S. Treasury Secretary Timothy Geithner. “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.”

GM announced on April 21 that it made its final payment of $5.8 billion to the U.S. Treasury and Export Development Canada, paying back its government loans in full.

GM received $50 billion of U.S. assistance in its bailout, much of which was converted into stock. The Obama administration holds 61 percent of the common stock in the Detroit automaker.

– By: Stephen Calogera

Source: Automotive News (Subscription Required)