Sunday, May 02, 2010

GM Pays Its Loans Back - One of the More Brazen Prevarications We've Seen Lately

GM CEO Ed Whitacre claimed in widely aired ads this week and a guest column in the Wall Street Journal, that the company had paid back its loans from the government early and in full. Not to put too fine a point on it, this is a flat-out lie. Even the New York Times isn't buying the claim. Not only that but the NYT reporter, Gretchen Morrison, goes so far as to accuse the Obama Administration, and Treasury Secretary Tim Geithner in particular, of encouraging the claim and even actively echoing it.  In fact, the company paid back $6.7 billion in loans not from operating earnings, but from TARP funds placed into escrow for it to tap for working capital purposes. In other words, they paid the taxpayers back with money the taxpayers had provided. Reason's Nick Gillespie illustrates for us:

I went and took a look at the company's latest SEC filings. The 10K (annual financial statement) for the year ended 12/31/2009 was just filed on April 10 (late, it should have been filed on March 31) and for the period between the government takeover of the company in early July and December 31, the company had a negative EBITDA (earnings before interest, taxes, depreciation and amoritzation) of ($348 million). In other words, it didn't generate enough cash from operations to even cover interest expense incurred on the debt, $694 million,  let alone any principal. Also notable is the fact that the company filed a 10Q (quarterly report) on the same day, for the quarter ended 9/30/2009, so almost 5 months late. Its 10Q for 3/31/2010 is due on May 15th. So we don't really know how the company has done since the end of the year or if it will file on time.

Ed Morrissey has more over at Hot Air, as does Scott Johnson at Power Line.

It looks like the standard lefty MO is in play here. If the facts don't support you, lie. If called on the lie, attempt to brazen it out. If that doesn't work, question your interlocutor's motives and if all else fails, change the subject. We appear to be in the brazen-it-out stage still. I can't wait to see what they come up with next.

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