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GM's CEO Rejects Repaying Feds for Bailout Losses
PolygamousRanchKid writes with news that GM's outgoing CEO doesn't agree with the National Law and Policy Center's call for GM to repay the loss made by the Treasury from their bailout. From the article: "GM CEO Dan Akerson rejects any suggestion that the company should compensate for the losses. He says Treasury officials took the same risk assumed by anyone who purchases stock.
Akerson said that GM repaid all the debt issued by the government beginning in December 2008 when George W. Bush was still president and extending into the first year of Barack Obama's presidency. He added that it was the Treasury's decision ... to take an ownership stake in the form of company shares."
Why on earth pay back 10B to the tax payers when that could buy a whole load of politicians to lend(give away) more money?
Waiting for an amusing sig.
Absolutely right, they shouldn't be forced to pay back government losses. They, along with every other too big to fail corporation, should pay annually in perpetuity into risk pool that will handle all future bail-outs. Not as a tax, but as an insurance pool, that coincidentally, should be required to be held in US treasury bonds.
I'm sure if you presented that idea, they'd rush to substitute the $10b payback.
"Don't you know you're going to shock the monkey?"- Peter Gabriel
The word socialism gets tossed around carelessly by right wing pols who don't know what it is. To them it's just a nasty thing you say when liberals like me want to redistribute a little wealth. But real socialism, as meant by Karl Marx, is defined as "the ownership of the means of production by the state". Domestic spending on public education or health care is NOT socialism. But government assumption of corporate shares is the real thing. In our system of economics, corporations are not people and governments do not own the means of production.
"He took a duck in the face at 250 knots." -- William Gibson, Pattern Recognition
The government did not issue a loan, they bought a large amount of stock.
a) Would they have purchased that stock if it hadn't been a "bailout"?
b) A "loan" would have left them with nothing if the company had tanked. A stock purchase would entitle them to some company assets to sell off, this is what most people call "security".
No sig today...
He is technically right and morally wrong.
Let the shareholders decide by vote. We the consumers (and the taxpayers) can then decide if we want to continue to buy their products, bail them out, or invest as shareholders. This is a decision that will have very long term effects on GM that will affect them long after the CEO is gone. I know it will affect my future buying decisions.
Keep the Classic Slashdot.
You are wrong.
a) As a "bailout", the fed took ownership of the company through stock. How shall GM pay their owners? From what? Shall they take a loan to pay them? From whom? Should they only pay the fed or the other owners as well?
b) If the company had tanked, its assets would be liquidated and payed out to the creditors. Not the owners, you see, because they are the ones who failed. They are left with nothing when the company fails
Err ... I think you're confusing things here. When a company tanks, its assets get sold off (or otherwise turned into money) to satisfy the creditors (the people who gave loans) demands. In this process, the stockholders shares go *poof*, mostly.
When a company tanks, the creditors are in a slightly better position than the stockholders. In fact, the creditors might end up being the new owner of the company.
...at all levels.
As I calculate, the cost to the government is REALLY more like net $70 billion, when you take the $50bn aid, the devaluation, the forgiven loans, and then deduct the small amount that came back to the government as it sold off its shares.
The FACT is that government handouts validate, enstantiate, hell, they ENCOURAGE and reward the sorts of shitty decision-making that caused them to be necessary in the first place. At ALL socioeconomic levels.
-Styopa
All the really big players are self serving cartels run for the benefit of the top tier insiders. The stock holders, clients and workforce are short changed and the largest profit goes to the Chief XXX Officers and the Board of Directors.
When the Feds bought GM stock it was poison. No one in the investment world would touch it. If the government didn't take a gamble then GM would have been out of business. Remember that in capitalism larger risk should reap larger rewards for success. However when it comes to bilking the government (and thus the taxpayers), suddenly basic principles of risk and reward no longer apply.
Speaking of rewards, look what happens when CEOs and the like screw everything up. No matter how horrible a job they do, they are always paid vast sums of money. Their performance has nothing to do with their payout.
Look at Mozilo, the CEO of Countrywide Financial. Time magazine him one of the "25 People to Blame for the Financial Crisis". He made hundred of millions of dollars. He settled all civil and criminal charges against him for $67.5 million, with Countrywide picking up $20 million. When Countrywide was at it's height, he made loans to all sorts of insiders at Fanny Mae and and Congress members and their families under a program called the "Friends of Angelo (FOA)" VIP program. It's all been swept under the rug.
Another example is that unlocking a smart phone under contract is a federal level felony, like interstate drug dealing or kidnapping. Even though the Obama administration said they would try and change the law, the Trans Pacific Partnership treaty has a provision making this permanent. Since it's an international treaty, there would be no way to overturn this other then renegotiating the treaty will all the other countries. The phone company cartel has their dirty hands all over this. The various carriers only compete on one thing: who gets to take more out of you wallet while delivering the minimal service they can get away with.
No real competition in the US. Move along, nothing to see...
Why is Snark Required?
arguably not even stuff that matters. Most major banks fought repaying debts to the government under TARP, but lost. There is no reason to think GM would be so bold as to think they could get away with it. The real story, if any to be attributed, is that GM thinks raising a stink about this isnt likely to affect their public image or piss off the cloistered elite.
Lemon socialism, the willful and intentional bailout of free market capitalist corporations at the expense of regular citizens, is something for which most americans have a seething distate but thats largely been ignored by the plutocracy. when it cant be shrouded from limelight, the rich funnel cash to the rich to convince the everyman that somehow poor people are a larger financial and social demon than the plethora of warbucks and moneysworths that strongarmed our leadership into writing off their willfull ignorance and criminal disregard for society outside their inculcated elite. GM does great disservice to this veil by hauling from the grave these hastily rested memories.
when GM dog-eared its pockets in front of congress they were so displaced from how americans lived it took them two tries to get their sad-face and beggary right. they frustratedly plodded off their leer-jets and said goodbye to their inflight perignon as americans collectively cried WTF. They foresook their ferarris and told the driver instead to pilot an american SUV to the whitehouse in lieu of the Rolls Ghost to which all were accustomed. this to them was the equivalent of donning a shoeshine boys flatcap for an afternoon as they arrived still clad in a regality most americans would struggle to even approach. 'pay up of they all starve' they said, and pay up the government did. Through TARP and cash for clunkers and rebates innumerable the united states automotive industry received the largest bailout in history and for its efforts was rewarded with another eight years to kick its heels onto its mahogany desk while real innovators like Tesla were demonized at their behest for loans they legitimately worked to earn. Outflanked by foreign competetors, again, GM brokered deals with Nissan and Toyota to secure token technologies that customers wanted like hybrid or all electric systems but were rebuffed by a market that largely found an affordable and reliable solution elsewhere. They secured a token few volt owners; the battery powered equivalent of a diesel train. They buried the Aspine hybrid, the very same vehicle which executives traveled to congress, and instead invested in platforms designed in europe and brazil for the small efficient reliable vehicles they were incapable of producing domestically.
so for GM to suggest they shouldnt pay back a part of a loan, while no different than any other industry, should be remembered as the day when the pot-bellied cousin of the elite dared to bring up its uncles marriage counseling.
Good people go to bed earlier.
GM had met the terms required of it from the bailout - some of which was paying back in cash, and some of which was paying in stock. The government decided to sell the stock at a loss. That's not GM's fault.
Here is my question - what happened to GM stock when that many shares suddenly flooded the market? Wouldn't that make stock prices go DOWN? Ironically, though, the stock price went up considerably as investors are happy the government no longer holds a part of GM.
In any case, whether GM benefited from this or not, the point is that 1)GM fulfilled its obligation and 2) the government sold stock at a loss. Maybe this lesson will force the government to make better financial decisions. Okay, probably not, but one could hope
If the company's liquidated assets total to less then it's outstanding debt, then yes, even the top preferred shareholders get zero money back. Back in 2008 when GM was bailed out the asset to debt ratio was about 1/2...