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No "money back guarantee" for taxpayers - we're stuck with the GM bailout tab

The TARP Congressional Oversight Panel announced Tuesday that "New GM" will have to achieve "highly optimistic" market performance if the Federal government is to have even a chance of recovering the roughly $67 billion that it loaned to the troubled automaker this year. The oversight panel also recommended that the government should place its shares of GM and Chrysler into an independent trust in order to reduce the appearance of "political pressure and government interference."

For GM, repayment of TARP would require government shares of the new GM to be worth $40.7 billion, assuming other debt is repaid. That means the market cap of the entire company would need to be $67.7 billion, the report said.

In April 2008, when old GM shares were at their highest, the company's total value was $57.2 billion, the panel said. The figure is not adjusted for inflation.

"New GM will have to achieve a capitalization that is higher than was ever achieved by Old GM if taxpayers are to break even," according to the report.

But if you buy a Government General Motors vehicle between now and November 30, you'll get a money-back guarantee from the company. *sigh*

And while we're on the subject, guess what else GM will probably never be paying for:

Among those clamoring for attention and payouts from Motors Liquidation Co., the company that assumed General Motors' unwanted assets after its Chapter 11 filing, are the environmental and economic redevelopment departments of state governments.


buick_city.jpg


Before bankruptcy, GM estimated it had $1.9 billion in environmental issues and litigation liabilites. Motors Liquidation Co., though, has only about $1.2 billion to manage the entire wind-down of its affairs -- and as one might expect, attorneys handling the matter are expected to get a huge chunk of that. The figure to clean up sites in places like Buick City (pictured, before the buildings were demolished), Michigan and Massena, New York has been pegged at $530 million. However, the way it's looking, there won't be anywhere near that much money to get the job done.

The affected areas are afraid they will have to pay for the clean ups or simply let the land go unused. The problem with that: those local governments don't have the money. And they can't expect a developer to spend millions to clean up an old mess. If not Motors Liquidation or GM, civic representatives want the government to foot the bill since the current administration orchestrated the deal. (emphasis added)

Your tax dollars at work, folks.

(Original post amended to include the money back guarantee story.)


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Comments (13)

OBAMA ANNOUNCES GOVERNMENT ... (Below threshold)

OBAMA ANNOUNCES GOVERNMENT TAKE OVER OF BOY AND GIRL SCOUTS. Here, http://stopthepresses2.blogspot.com/search/label/Scouts

MichaelGood post. ... (Below threshold)
HughS:

Michael

Good post. Obama and Congress did actually stimulate an economy with Cash for Clunkers, it just wasn't the US economy. Foreign car makers and parts makers made a bundle in July.

Tax payers will not get a dime back, but the law of unintended consequences is enriching our foreign competitors. Go figure.

In April 2008, whe... (Below threshold)
Victory is Ours:
In April 2008, when old GM shares were at their highest, the company's total value was $57.2 billion, the panel said.

That's a lie.

In April 2000, GM's stock reached $93.62 per share.

In April, 2008 GM stock was well into it's decline - down around $20.

Nice bit of bullshit there.

Vic

VIC, I'm shocked! Are you ... (Below threshold)
GarandFan:

VIC, I'm shocked! Are you saying that The TARP Congressional Oversight Panel is LYING TO YOU?

Or is it just your reading comprehension?

<a href="http://tinyurl.com... (Below threshold)
JustRuss:

http://tinyurl.com/lzkpgj

Here is the stock history for the company formerly known on the exchange as GM. Vic is (close) to being correct though I can't see above high 80's I'm willing to take his word for the 2000 quote.

However they probably didn't do a 10 year as those years were barely bush and shouldn't be counted since GM's greatness at the time could be attributed to Clinton.

No they probably only used the last 2-5 years, in which case the high point was indeed in 2007 not 2008.

What are they playing at lying to the taxpayers like that? Huh Vic? The only one on the panel who is identifiable as Rep or Dem is Rep. Jeb Hensarling (R-TX).

So is it the Republican on the committee steering this toward the bad? Is it Elizabeth Warren who chairs the COP? The Dems do hate her you know...

Just wait for the repo man,... (Below threshold)

Just wait for the repo man, he's coming for all them cars people bought that they wouldn't be all to afford if not for the government cash.

Vic,I think... (Below threshold)
hcddbz:


Vic,

I think the report may have been badly worded but the Market Cap number is still the same. GM's market cap was

$56 billion in 2000, when the stock was at its all-time high of $94.62 a share.

GM did reach 65B Market Cap in 1999 but that was after a stock buy back which raise share price and reduced outstanding shares at the same time.

It still highly unlikely we will be paid back by GM.


Can't Congress just require... (Below threshold)
bobdog:

Can't Congress just require all union employees to trade in their foreign cars for GM products by the end of the year? Seems to me that would solve the whole problem. They're largely responsible for destroying the company in the first place.

Maybe GM could just sell some bonds or borrow in the open market. Ooops. Scratch that. Nobody would buy them any more, since there is no longer any assurance at all they would be paid at maturity, thanks to Washington.

In fact, the few people in this country who can actually afford to be shopping for cars right now doubt that GM is going to be around long, which is why they're only looking at Ford and foreign cars.

Pyrrhic Victory is Yours. Own it.

So is this an unfair tradin... (Below threshold)
Les Nessman:

So is this an unfair trading practice used against Ford? Using 'free' gov't money, GM can engage in unfair business practices that Ford, or any other real company, can't compete against.

So where's the gov't do-gooders with their anti-trust lawsuits against GM? Where's the crusading Attorney Generals from states with Ford plants?

And this is just how the gov't will run many (or most or all) private health insurers out of business if we get socialized Obamacare.

Let's face it, we as taxpay... (Below threshold)
GarandFan:

Let's face it, we as taxpayers are screwed. We're never going to get a payback.

It would have made more sen... (Below threshold)
JustRuss:

It would have made more sense, to let GM bankrupt in the first place, and instead give every american family a piece of that Bailout and CARS money to go out and spend.

Or better yet, don't spend the money at all, we don't have it. You can't dig your way out of a hole.

Gosh, you know, it cost a l... (Below threshold)
jim:

Gosh, you know, it cost a lot of money to keep our entire economy from collapsing.

That's terrible. We shouldn't have spent that money - we should have saved it so that when the economy collapsed, we could burn the paper money to keep warm, and use the fires to melt the coin money into swords to use against the roving gangs searching for food.

Jim...I guess this is the p... (Below threshold)
Shane:

Jim...I guess this is the point that the violins should be playing? Got to love the fear mongering that apparently only exists on the right. Oh no save the incompetent Union workers and their beloved GM that they ran into the ground or the world will stop turning...blah...blah...blah give me a break!




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