Thursday, April 22, 2010

Utterly Shameless - & Fraudulent

You might have caught this bit of seemingly good news today if you saw this commercial . . .

Or you might have heard the news from an ecstatic White House. This from CBS News:

No one was cheering louder than the White House about General Motors' repayment of $6.7 billion in loans from the federal government.

First thing this morning, Press Secretary Robert Gibbs alerted his 56,000 followers on Twitter of "BIG NEWS."

"GM pays back US $6.7 billion used to save jobs," Gibbs exulted. But he had more.

"BIGGER NEWS," he trumpeted. "Payment was 5 years ahead of schedule."

. . . Later at his daily press briefing, Gibbs didn't wait for a reporter to ask him about the GM payback. He portrayed it as a vindication of President Obama's decision to provide a federal bailout to GM and Chrysler . . .

The amount repaid by GM is less than 13 percent of the $52 billion in federal bailout funds provided to the automaker. The remainder of the bailout was converted into stock, which GM still intends to pay off. Gibbs concedes, "obviously, we're not out of the woods by any stretch of the imagination." But he thinks the payback demonstrates that GM is on a path to renewal. . . .

Vice President Biden added his voice to the White House chorus, hailing the GM payback as a "huge accomplishment."

"The President of the United States took a lot of heat for that effort," said Biden of the GM bailout, saying it kept the company alive while it was transitioning.

"And I would just like to point out that I am proud to be associated with the guy who saw the necessity to do this," boasted the VP about his constitutional boss.

Biden said the rapid GM payback "exceeded our expectations."

White House economic advisor Lawrence Summers came closest to telling the critics of the bailout "we told you so," without actually using those words.

"This turnaround wasn't an accident of history," said Summers in a blog on the White House website. "It was the result of considered and politically difficult decisions made by President Obama to provide GM and Chrysler - and indeed the auto industry - a lifeline, if they could demonstrate the will to reshape their businesses and chart a path toward long-term viability without ongoing government assistance."

But the payback also gives the White House ammunition in defense of future government bailouts, should they be needed. Gibbs said it's the White House hope they won't be.

Great news for Obama and GM indeed - until you get the rest of the story. This, courtesy of Jamie Dupree via Q&O:

The issue came up yesterday at a hearing with the special watchdog on the Wall Street Bailout, Neil Barofsky, who was asked several times about the GM repayment by Sen. Tom Carper (D-DE), who was looking for answers on how much money the feds might make from the controversial Wall Street Bailout.

“It’s good news in that they’re reducing their debt,” Barofsky said of the accelerated GM payments, “but they’re doing it by taking other available TARP money.”

In other words, GM is taking money from the Wall Street Bailout – the TARP money – and using that to pay off their loans ahead of schedule.

“It sounds like it’s kind of like taking money out of one pocket and putting in the other,” said Carper, who got a nod of agreement from Barofsky.

“The way that payment is going to be made is by drawing down on an equity facility of other TARP money.”

Translated – they are using bailout funds from the feds to pay off their loans.

This is absolutely unreal. This is nothing more than a shell game with taxpayer money, yet it is being presented as if GM is actually becoming a profitable organization again. Its been a long time since I looked at securities law, but I would be willing to bet this incredibly bit of misleading news from GM and its primary stockholder, the Obama administration, easily crosses those regulatory lines that define fraud under SEC regs. This is GM and the Obama Administration colluding to perpetrate a massive fraud on the American people.

1 comment:

OBloodyHell said...

> I would be willing to bet this incredibly bit of misleading news from GM and its primary stockholder, the Obama administration, easily crosses those regulatory lines that define fraud under SEC regs.

It would if this were two businesses colluding. But one of the operating principles of the Federal government, particularly (but, admittedly, not exclusively) under the Obama administration, is "Rules for thee, but not for me".

This is an abject lesson about one of the rules that needs to be directly ensconced in the next Constitution.

All rules that apply to the people also apply to the government, excepting explicit predefined exceptions and ones addable to such list only by easily revoked, but tough to obtain, allowance by the people themselves.

Make 'em tough to add and easy to remove. Something like a 2/3rds supermajority for adding, but only a 1/3rd minority to revoke ought to do it.