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."

Comments

Wrong use of money these days

[MrDoh!]

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?

Re:Wrong use of money these days

[Sockatume]

It doesn't affect him personally, but it does affect GM's bottom line and it's his duty to the shareholders to protect that. Ultimately he's got to choose between two sets of investors: GM's shareholders, and the general public, and he's chosen the ones who still hold shares. As far as is economic function is concerned he has done exactly the right thing. Of course one would like to think that CEOs of all people weren't reduced to the role of an amoral intelligent agent serving the mother company, but at the end of the day even a brain cell doesn't get to argue with the body's need to survive and flourish.

Re:Wrong use of money these days

[confused one]

He didn't take the money, Treasury chose to invest the money under direction of both the Bush and Obama administrations, in order to keep GM and its supply chain from collapsing. While they lost money on the face of it, the economy gained value, likely in excess of the $10B loss. If the end result exceeds the scenario where government did nothing, then government did it's job by stabilizing the economy.

This isn't personal. His job is to protect shareholder value. He indicated, in the interview, that if he paid back the $10B loss he would be opening GM up to lawsuits from every other shareholder who lost money in the bankruptcy.

Re:Wrong use of money these days

[Stolpskott]

a) Those 'other shareholders' bought the shares voluntarily. The taxpayer didn't.

Very true, but "the taxpayer" did not choose to invest in GM in the first place, the US Government did. Equally, "the taxpayer" did not choose to sell their shares in GM, at a lower price than those shares were bought for (thus generating the losses), the US Government did.
The US Government had a very compelling reason for buying those shares and shoring up the GM corporate entity and its supply chain. However, there was no contractual obligation for them to sell the shares when they did - as far as I can tell, that decision to sell was made for purely political/PR decisions. Admittedly, those reasons are also compelling - if the US Government introduces and legislation that will have some kind of positive impact for car manufacturers, then there is a conflict-of-interest issue to be addressed, so it is in the Government's interest to avoid holding the shares for an extended period.
However, the Government decided to sell when it did, and the Government is (or should be) responsible for the losses incurred through that decision. After all, if the transaction had yielded a massive profit, the Government would not have been willing to hand that profit over, either back to GM for further investment or to some other organisation that could use it. That profit would go to the treasury to be used.
The company whose shares are being bought and sold has no control over that process, as the shares are freely tradeable on the open market. So without any leverage of control, the company cannot assume the liability for losses. Want to complain about it? Welcome to capitalism. Complaints can be addressed to our Complaints Manager, Helen Waite. Her office is in the basement. Form a queue outside the door, and when someone asks what you are doing, tell them that you were told to go to Helen Waite.

Risk pool payment, not payback.

[patrixmyth]

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.

real socialism

[duckintheface]

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.

Re:real socialism

[FriendlyLurker]

True. The US is the biggest corporate welfare socialist regime in the world. Socialism is only a dirty word when you, dear tax payer, demand more social service bang for your buck. Why spend good tax $$$ on a dignified social security net when you can spend (appropriate?) X times more on an effective police state to crack down on the resulting crime due to a lack of one, or sell more health insurance even.