Who does he think he’s kidding? The CEO of GM, Ed Whitacre, strolling through one of our (and I say our, because as taypayers we own a fair chunk of GM) car plants and telling us how he’s paid back the government loans with interest, ahead of schedule.
Back in the day, if you ran an ad like that, and held a broadcast license, the Federal Trade Commission would call the Federal Communications Commission and have you shut down for running an ad you knew was false and misleading.
The Whitacre ad, which saturated the TV airwaves for the past several days, is more than misleading. It’s a downright, bold-faced lie.
Whitacre’s company got $52 billion in taxpayer aid. Whitacre’s minions sent a check to the U. S. Treasury for $6.7 billion. They got that money from dipping into another TARP (Toxic Assets Relief Program) pot of money made available to GM courtesy of the U.S. Taxpayer.
So, while Whitacre would have us believe he’s “paid up in advance”, his company still owes the taxpayers all $52 billion. Only in the fantasyland of GM finance can you use money borrowed from the taxpayers to “pay them back”.
Pressed to the point, some GM PR staffer said “OK, it was government money, but nobody thought we’d be able to pay it back”.
GM’s “earnings” (losses) certainly don’t support a payback of any sort. But, as public relations executives have known for decades, if you tell a lie often enough, a substantial percentage of people will come to believe it’s the truth.
The GM ad is a lie.
Lee Iacocca must be mad as hell. For those of us old enough to remember the government bailout of Chrysler back in 1979, the same thing happened. Chrysler was effectively bankrupt when it got the “assistance”, and Iacocca a few months later did the same thing Whitacre did…claimed the money was “all paid back”.
All Iacocca got was a $1.2 billion loan guarantee package that included sweeteners to allow the company to renegotiate bank loans, vendor contracts, and the other things that are typically done in a Chapter 11 bankruptcy. GM got $52 billion!
But the lies told and myths surrounding Chrysler’s “recovery” in 1979, 1980, and 1981 are the same stuff we’re beginning to hear all over again.
We just don’t learn. The media banks the ad money and moves on.
I just went through a very, ahem!, lively discussion of this very ad last week. Reason magazine's Hit & Run blog had the whole thing: an excerpt from Iowa Senator Charles Grassley's letter to Treasury Secretary Tim Geithner, Whitacre's announcement of GM's "payback", the notorious GM ad itself, a Saturday Night Live spoof of the automaker bailouts, as well as a link to another Reason piece on the whole (illegal) bailout from last September.
ReplyDeleteThe idea that GM could get in trouble with the FCC is piquant but unlikely. I mean, the Obama-picked CEO of GM getting nailed for false advertising? Come now! There are billions at stake here!
I was ridiculed by a friend last week for not being aware that GM's earnings couldn't possibly have covered any loan repayment. I didn't exactly feel like a fool because I normally don't follow business news. It stung a bit, though, because it's hard NOT to take Whitacre's proclamation at face value. I mean he said, "We have repaid our government loan, with interest, five years ahead of the original schedule." Isn't he at least a LITTLE embarrassed for lying through his slimy teeth so bald-facedly?
The Town Crank
Link to Reason's Hit & Run: http://reason.com/blog/2010/04/23/gm-pays-back-tarp-loans-withta
ReplyDeleteI wonder how much of Wisconsin's taxpayer money, doled out by TT, was paid back by American Motors?
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteGood commentary by Nick Gillespie of Reason TV on the loan "payback".
ReplyDeleteI liked the way he compared GM's "payback" with being given $20 by your parents to buy a Christmas gift for them: you bought a gift worth $3 and pocketed the rest!
The Town Crank