That GM loan payoff? ...Not so much.

[unixronin]

Remember that report a few days ago that GM had paid back the balance of its bailout loans?  Well, according to both Fox (yeah, yeah, go on, get the jokes over with) and the Wall Street Journal, it puts a bit of a different perspective on this accomplishment when you learn that GM repaid its bailout loan using TARP money.

Now, a Treasury spokesman said this is OK, because it was "public knowledge" that GM would use the money loaned it under TARP to repay its bailout loan as long as it didn't need it for anything else.  But this argument is mendacious.

Consider:  You're in trouble and can't pay your rent, so I loan you a hundred bucks.  Six months later, you're broke again, and I loan you another hundred. Three months after that, you haven't actually needed to spend the second hundred, so you use it to pay back the first hundred and say that this settles your debt.

No, it doesn't.  You still owe me a hundred bucks.

Comments

[attutle.livejournal.com]

"Consider: You're in trouble and can't pay your rent, so I loan you a hundred bucks. Six months later, you're broke again, and I loan you another hundred. Three months after that, you haven't actually needed to spend the second hundred, so you use it to pay back the first hundred and say that this settles your debt.

No, it doesn't. You still owe me a hundred bucks."

But you see, the government now owns half the company, so the company is only responsible for half the debt, and they've repaid that....

Grumble.

[lebo-superman.livejournal.com]

If both payments you gave "me" were agreed to be loans, your consideration would be valid. If the second payment is a gift, it is mine to do with as I please, even if that is to pay you back for the loan. I'm not real sure, but I think that payments made under TARP were gifts.

[jhetley.livejournal.com]

But when GM does their IPO on the New! Improved! General Motors Corp, we'll make it back on sale of all that stock we own!

[luke-jaywalker.livejournal.com]

Scrap metal prices are going to have to get damned high for *that* to be worth anything.