Why I Bought A Ford !

Ed Morrissey at Hot Air reported Friday on the announcement that GM had paid off its government loans.  Well, things are not always what they appear to be.  I am not a financial analyst, and I don’t claim to understand everything I am about to relate, but I will do my best.

According to the article:

“During an April 20 hearing on Capital Hill, Sen. Tom Carper, (D-Del.) asked some pointed questions of Neil Barofsky, the “special watch dog” on the Wall Street Bailout, aka, TARP.

“”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.”…”

Wow.  Does that mean if I pay my VISA with my MasterCard, I can consider myself out of debt?  This is my kind of accounting! 

Mr. Morrissey further reports:

“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.” See, Office of the Special Inspector General for TARP, Quarterly Report to Congress dated April 20, 2010, page 115.”

Senator Charles Grassley (R-IA) has written a letter to Treasury Secretary Tim Geithner asking the following questions:

“Mr. Girsky then said that GM originally planned to pay the loan over the next five years. So the question is why–other than a desire to justify excluding GM from the administration’s TARP tax proposal–would Treasury and GM reduce GM’s TARP debt with TARP equity and then mischaracterize it as a repayment from earnings? Accordingly, please explain:

1) Your department’s justification for allowing GM to use funds from the TARP escrow account to repay TARP loans,

2) The amount of funds remaining in the TARP escrow account at Treasury that may be released to GM, and

3) The date that you anticipate that the remaining funds in escrow will be released to GM.

Thank you in advance for your cooperation. Please provide the requested information by April 30, 2010. …”

I, for one, would like to read the answer to that letter.