GM Pays Off Its Visa With Its Platinum Visa
You may have seen GM CEO Ed Whitacre busting his buttons on the teevee the other day: “We have repaid our government loan,” said the proud papa. “In full, with interest, five years ahead of the original schedule.”
Since GM had only sixty seconds to make the case, there must not have been time for the qualifier — GM’s TARP loan was paid with funds from another government loan:
On April 20, GM repaid the Treasury loan with cash in an escrow account that it owns. The escrow account was created last summer in connection with the structuring of GM. The money used to fund the escrow account came from a portion of the proceeds of a loan made by both the Treasury and the Canadian government. The escrowed funds were expected to be used for extraordinary expenses, and a portion of the funds were so used. Treasury retained approval rights over GM’s use of funds from the escrow account in order to protect the taxpayer, but the cash was still the property of GM.
That would be Herb Allison, the delightfully titled “Assistant Secretary for Financial Stability,” performing an equally delightful tap dance at the behest of Chuck Grassley. It’s GM’s cash, Herb insists. We merely gave it to them. And controlled how they spent it.
Nice work, Herbicide. Those long years at Merrill Lynch served you well.