WASHINGTON -- General Motors Co. repaid its $4.7 billion federal loan this week with other U.S. funds, creating nothing more than a “money shuffle,” a Republican senator said today.
Sen. Charles Grassley of Iowa, the senior Republican on the Finance Committee, cited an auditor's report that GM repayments were coming from U.S. Troubled Asset Relief Program funds in an escrow account, rather than from GM earnings. The U.S. Treasury and GM disputed aspects of Grassley's claim.
“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 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.”
Less than a year after filing for bankruptcy, GM yesterday paid off the last $4.7 billion in U.S. loans and $1.1 billion in Canadian loans.
GM received a total of about $50 billion of U.S. assistance in its bailout, much of which was converted into stock. The U.S. Treasury Department holds 61 percent of the common stock of the automaker.
The company is preparing for an initial public offering that would let the U.S. government reduce its stake.
Treasury said today that GM repaid its loan from its own cash account that was part of the government's overall investment.
“This account was expected to be used for extraordinary expenses, and the fact that GM has decided that it does not need to reserve these funds for expenses is a positive sign for our overall investment,” Treasury spokeswoman Meg Reilly said.
GM repaid the loans ahead of its self-imposed June 30 deadline, she said.
GM spokesman Greg Martin deferred to Treasury's response. He said that the company decided to repay the loan early “because we believe we have a sufficient cash balance and it's important for the company to pay back its debts as soon as possible.”
The audit cited by Grassley was reported to Congress this week by the TARP inspector general, Neil Barofsky.
The source of funds for GM's loan repayments “will be other TARP funds currently held in an escrow account,” the Tuesday, April 20, audit report said.
The audit cited GM's own filing with the government in November. GM said then the loan repayment would come from leftover funds set aside by the Obama administration to finance GM's fast-track sale out of bankruptcy in July.