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Did You Hear the One About GM Paying Off Its Government Loans?

It was a big lie. Of course, the lie was in service to the State, because it was meant to show that government intervention in the economy really does work. Ah, but then there's "the rest of the story."

On April 20, Delaware Senator Tom Carper asked Neil Barofsky, the Treasury official in charge of oversight over the TARP program, about the GM loan payoff. "It’s good news in that they’re reducing their debt," Barofsky said in reply, “but they’re doing it by taking other available TARP money.”…

To that Carper replied: “It sounds like it’s kind of like taking money out of one pocket and putting in the other."

The GM money shuffle also got the attention of Senator Charles Grassley, who Ed Morissey at Hot Air notes originally "backed the bailouts." In a letter to Timothy Geithner, Grassley complained: "General Motors (GM) yesterday announced that it repaid its TARP loans. I am concerned, however, that this announcement is not what it seems. In fact, it appears to be nothing more than an elaborate TARP money shuffle."

Continuing, Grassley noted:

On Tuesday of this week, Mr. Neil Barofsky, the Special Inspector General for TARP, testified before the Senate Finance Committee. During his testimony Mr. Barofsky addressed GM’s recent debt repayment activity, and stated that the funds GM is using to repay its TARP debt are not coming from GM earnings. Instead, GM seems to be using TARP funds from an escrow account at Treasury to make the debt repayments. The most recent quarterly report from the Office of the Special Inspector General for TARP says “The source of funds for these quarterly [debt] payments will be other TARP funds currently held in an escrow account.”

Download Grassley's full letter here (PDF).

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