Breaking: General Motors Will Begin to Repay Government's $6.7 Billion Loan - Pontiac G6 Forum
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post #1 of 4 (permalink) Old 11-16-2009, 02:10 PM Thread Starter
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Breaking: General Motors Will Begin to Repay Government's $6.7 Billion Loan

In a surprising move, General Motors has announced that it will begin to pay back $6.7 billion in loans to the U.S. and Canadian governments, starting as early as December. GM wasn't required (or expected) to begin paying back the loan until 2015.

The news comes as GM releases its third quarter results with a loss of $1.15 billion. That number isn't good but is significantly less than the losses the automaker has been reporting as of late.

"It's a lot better than what we had expected," said company CEO Fritz Henderson in a conference call. "Nonetheless, it's a loss, and you cannot be satisfied with it."

Henderson also released a statement in which he said that, "We have significantly more work to do, but today's results provide evidence of the solid foundation we're building for the new GM."

The news comes after General Motors announced its October sales, with the auto-giant posting its first sales gain in 21 months.

The repayment process will begin with a $1 billion payment to the U.S. treasury in December, with a $192 million payment to the Canadian government. The $6.7 billion loan, is however, a small portion of what GM borrowed from the U.S government, with $50 billion in total coming from the taxpayers. The majority of that amount was given in exchange for the Treasury's 61 percent ownership of the automaker. The treasury has said it will begin selling shares in GM once the 6.7 billion loan is reduced to $3 billion.

"I've been asked since we went into the bankruptcy, probably a hundred times, 'When are you going to start paying back the taxpayer?' The answer," said Henderson, "is now."

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post #2 of 4 (permalink) Old 11-16-2009, 03:27 PM
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I was against the bailout to begin with, it's the law of natural selection "only the strong will survive". Its good to see they will make good on their loan, too bad we (the taxpayers) won't see that money back though. Our government should use that money to fund their little healthcare project.


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post #3 of 4 (permalink) Old 11-17-2009, 06:22 AM
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In theory, competition is good because it rewards the strong and penalize the weak. But in practice, we should look at the bigger picture and examine the consequences if the government didn't bail out the domestic auto industry. Millions will be affected and out-of-work, the economy will take a nose dive if the key automotive sector collapses. Consumers will have less choices. Prices will take a big jump due to market instability and the reduced "economy-of-scale". And in the end, we will have an industry dominated by foreign companies, less competition, and weakened political power as a nation. Pure capitalism that does not allow government intervention and regulations are not a good idea.
We also should look at why GM failed. Some might think it's because of their poor products. But in reality, they are No. 1 in the world in volume, so their products overall are not to blame. The real problem is with their entire corporate structure. Their business model is doomed to fail. They have failed their customers, the public, their creditors, their shareholders, and themselves. In this situation, I believe they deserved to get bailed-out by the government. But they also deserved to go bankrupted. So they can start over and emerge as a new, stronger, and more competitive company, which was what happened to a degree. The only thing I don't like is that the old management and the old union still have too much power to be able to screw things up again in the future. They ran the old company to the ground, why give these guys a second chance with public money?

Spending money on universal health care is different. It is meant to provide a social benefit to the citizens. Once the money is spent, it is gone. It will never turn a profit and it is never meant to be returned.

With a bail-out, there is a chance that the money will be returned once the company get back on its feet and start to turn around and became profitable.
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post #4 of 4 (permalink) Old 11-18-2009, 11:13 AM
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I still think if you continue to pad detrimental actions you also lower accountability. Still there is no leasson learned for the ones who caused this mess. The bailout only posponed the end result.
When you punish progess and reward unaccountability you're doomed.

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