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The Almighty Buck Politics

GM's CEO Rejects Repaying Feds for Bailout Losses 356

Posted by Unknown Lamer
from the loan-guarantees-bad-blank-checks-good dept.
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."
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GM's CEO Rejects Repaying Feds for Bailout Losses

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  • by MrDoh! (71235) on Tuesday December 17, 2013 @05:09AM (#45712249) Homepage Journal
    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?
    • real socialism (Score:5, Insightful)

      by duckintheface (710137) on Tuesday December 17, 2013 @05:28AM (#45712307)

      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 (Score:5, Insightful)

        by FriendlyLurker (50431) on Tuesday December 17, 2013 @05:57AM (#45712367)
        True. The US is the biggest corporate welfare socialist regime [thinkbynumbers.org] 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 [wikipedia.org] 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.
      • um, no...

        socialism
                1. a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

        The united states is partially socialist. Not as socialist as the USSR was or China is. Most of the western world is to some degree socialist. This is a matter of degrees not absolutes.

        • To some degree you need funding from corporations to get elected in the first place. I mean who pays for the campaign? That they get served in returns is bound to happen.

          The fact that in the US it is bloody hard to create alternatives to both leading parties is a problem as well insofar as the less people you have to buy off the easier it is to buy them off.

      • Yes, but you realize that "means of production owned by the state" is pretty much the thing that conservatives and right-wingers fear the most. Incidentally, your description of socialism also sounds a lot like fascism...

        Anyway, conservatives will question the logic of solving the problem of too much power concentrating in the hands of a few corporations by further concentrating that power into the hands of a single, enormous entity.

    • Re: (Score:3, Interesting)

      by Joce640k (829181)

      Because:

      a) It's the right thing to do, the money he took belonged to the people.

      b) It won't affect him, personally, on any level. His paycheck will be as big as ever.

      I guess he just enjoys being a tyrant and saying "no" to people when they come to him with reasonable requests.

      • by Sockatume (732728) on Tuesday December 17, 2013 @06:00AM (#45712377)

        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.

        • According to TFS, the government bought controlling shares in GM. Does that not mean the government, and the tax payer by extension, are the shareholders?
          • by Sockatume (732728)

            The government has sold its remaining shares, at a lower price than it bought them for in the first place. That's the loss alluded to in the summary.

        • by Flammon (4726)

          But, he survived and flourished because of the tax payers. They'll fail again and we'll see with the tax payers will help them survive a second time.

          • by Sockatume (732728)

            I didn't say it was right, just that amoral decisions by human beings are the inevitable outcome of the survival instincts of the vast and terrible creature they compose.

        • GM is correct of course. This was not a loan and the State could have chosen to sell off their shares after the economy rebounded and GM stock went further up. Assuming it ever did.

          What the State can do to get the money back from the auto industry is to start taxing cars more. But I suspect they would not like that either.

      • Neither of these statements are facts.

        Saying it's the 'right' thing to do is purely subjective. You don't know what he believes is the right thing to do, I'm sure in his mind he's already done the right thing and trying to argue that he should do YOUR right thing instead of his own right thing will never get you anywhere. It's a null argument.

        It very much will affect his position at that company. His overriding goal is to make choices that keep the company strongest to the exclusion of all other considerati

      • by confused one (671304) on Tuesday December 17, 2013 @06:25AM (#45712435)

        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.

        • by unitron (5733)

          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.

          The shareholders who lost money in the bankruptcy were those who held the previous shares, the ones from GM's first Initial Public Offering from back in the early 20th century, or shares issued subsequently, but before the bankruptcy.

          Technically, the corporation of which those shares were shares no longer exists.

          And those who bought bonds issued by that previous corporation have a much more legitimate gripe than the government.

          GM would be facing suits by others who bought the same shares the government did,

      • by GNious (953874)

        Wouldn't it simply be a question of whether the government ever need to do either GM or a company run by Dan Ackerson a favour, they refer to this case and say, "sorry, we're disinclined"...?

    • by flyneye (84093)

      Let's reframe the problem; GM's outgoing CEO doesn't agree with the National Law and Policy Center's call for to repay the loss made by the TAXPAYERS from their bailout.

      So, we send a load of hoodlums to the next meeting of the board of directors and cut a finger from each of their hands, slap them around a little and set their cars ablaze in the parking lot. Next time it will be worse, the interest just went up to 100%, and you better have a goddamn payment ready next time we see you. We know who you are an

      • by Talderas (1212466)

        By holding stock, they (the US government) may only recover whatever someone else is willing to pay for it. If, and only if, GM offered to buy back the stock in question could the price ever be remotely guaranteed to be close to what it was purchased for. Instead the US government sought to dump that stock for politically expedient reasons which manifested itself as the "loss" to the taxpayers. Had the US government issued a loan to GM this would not be an issue. Had GM and the US government signed a contra

  • by turkeydance (1266624) on Tuesday December 17, 2013 @05:10AM (#45712255)
    now if it had been Bitcoins.......
  • by patrixmyth (167599) on Tuesday December 17, 2013 @05:14AM (#45712269)

    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.

    • No, that makes no sense. There are inherent risks in investing and the investors assume those risks. Stop creating yet another bureaucracy to manage the private companies that are too big to fail (and who is "too big to fail" anyway?). Just let them fail and lose their investment, then behaviors will change. Your approach continues to reward poor decision making.
      • (and who is "too big to fail" anyway?)

        The famous economist John Maynard Keynes wrote something like:

        "If I owe the bank 100 pounds, I have a problem."
        "If I owe the bank 100,000 pounds, the bank has a problem."

        The US government decided that GM is to big to fail. Which meant they had two problems:
        1) GM was bankrupt . . . in other words, it failed.
        2) GM is too big to fail.

        Problem 1) was solved by fleecing the US taxpayers of billions of dollars. GM is solvent now.

        But problem 2) was not solved. GM is still too big to fail. Which means

        • Re #1, GM is solvent *for now*, but it is far from clear that they have fixed the structural problems that led to their bankruptcy. The biggest effect of their bailout may simply have been to prolong the pain and economic dislocations due to their collapse, not to to prevent their collapse.

    • by gl4ss (559668) on Tuesday December 17, 2013 @06:38AM (#45712479) Homepage Journal

      uh that makes no sense at all.

      they should have gone bankrupt - or loaned money backed by their assets... having a pool that's kept only to keep failing companies running belongs to the history of the ussr.

      • by unitron (5733) on Tuesday December 17, 2013 @07:21AM (#45712645) Homepage Journal

        uh that makes no sense at all.

        they should have gone bankrupt - or loaned money backed by their assets... having a pool that's kept only to keep failing companies running belongs to the history of the ussr.

        Who should have gone bankrupt? General Motors? They did.

        Or at least the previously exisiting corporation known as General Motors did. And the value of the shares of stock in that corporation fell to $0, and that corporation doesn't really exist any more.

        A new corporation also known as General Motors came into being, and issued stock, and it is some of that stock which the federal government purchased and then chose to sell for less than what they paid.

    • by swb (14022)

      I wonder if any economist has ever modeled what it would look like if all risk was pooled into a central risk pool versus the myriad risk pools we have now for all the various forms of hazard insurance.

      Maybe it wouldn't make any sense, but one of the principal arguments for most health care reform schemes is risk pooling. Maybe it only makes sense for like risks, but there are plenty of insurance companies that sell policies for essentially dissimilar risks (ie, my home insurer also provides my boat polic

    • You mean a new tax. I don't see them batting an eyelash at that. It's not like THEY will have to pay it.

  • Right and wrong (Score:5, Interesting)

    by Monoman (8745) on Tuesday December 17, 2013 @05:45AM (#45712339) Homepage

    He is technically right and morally wrong.

    Let the shareholders decide by vote. We the consumers (and the taxpayers) can then decide if we want to continue to buy their products, bail them out, or invest as shareholders. This is a decision that will have very long term effects on GM that will affect them long after the CEO is gone. I know it will affect my future buying decisions.

  • Some banker investing in a company does so because he expects profit, the money the state invested was to save the company which was done in turn to save work places (which is part of the job of a state). So they did not have the same choice as a banker but are now expected to play by the same rules? Sounds a little unfair to me ...

  • Bragging rights? Bought and paid for? "Bin Laden dead, GM alive"?
  • by msobkow (48369) on Tuesday December 17, 2013 @06:34AM (#45712469) Homepage Journal

    Unless they were bonds, suck it up. The stock market is a gamble, not a GIC or Treasury Certificate.

    I'm long past tired of "investors" suing for their losses. You want to gamble with your money, you take the risk of losing it.

    If you don't like the risk, buy bonds or deposit your money in a bank for their paltry returns.

    • by Joce640k (829181)

      I'm long past tired of "investors" suing for their losses. You want to gamble with your money, you take the risk of losing it.

      It wasn't their money to gamble with. It belonged to the taxpayers.

      The people at GM should be glad they still have a company and jobs to go to. Saying "thankyou" to the taxpayer doesn't make any sense to you? It's not like they don't have the money (in cash) to do so.

      • by Rockoon (1252108)

        It wasn't their money to gamble with. It belonged to the taxpayers.

        Its not your property if you do not retain the rights afforded to property owners.

        The idea that the money did not "belong" to the government is a fantasy based on wishful thinking. Its a pipe dream that doesnt jive with reality. The members of government that decide the fate of these vast sums of money are not asking you, the supposed "rightful owner" of the tax dollars, what to do with it.

        Nobody with the power to decide asked the question "is this good value for the taxpayer?" Nobody with the power to

  • by argStyopa (232550) on Tuesday December 17, 2013 @06:51AM (#45712549) Journal

    ...at all levels.

    As I calculate, the cost to the government is REALLY more like net $70 billion, when you take the $50bn aid, the devaluation, the forgiven loans, and then deduct the small amount that came back to the government as it sold off its shares.

    The FACT is that government handouts validate, enstantiate, hell, they ENCOURAGE and reward the sorts of shitty decision-making that caused them to be necessary in the first place. At ALL socioeconomic levels.

  • The Treasury is the Government. If the government wanted to, they could pass a law that would nationalize GM and make all shares currently owned by shareholders worthless. Or they could just do it for the amount they feel GM owes them. Maybe GM shouldn't let it get that far. They got bailed out by the only one that wanted to bail them out at terms that they "just could not refuse". Maybe they need to watch the Godfather a few times to let it sink in?
  • by Required Snark (1702878) on Tuesday December 17, 2013 @07:22AM (#45712649)
    This illustrates that anyone who thinks that the US economy is actually capitalism is delusional.

    All the really big players are self serving cartels run for the benefit of the top tier insiders. The stock holders, clients and workforce are short changed and the largest profit goes to the Chief XXX Officers and the Board of Directors.

    When the Feds bought GM stock it was poison. No one in the investment world would touch it. If the government didn't take a gamble then GM would have been out of business. Remember that in capitalism larger risk should reap larger rewards for success. However when it comes to bilking the government (and thus the taxpayers), suddenly basic principles of risk and reward no longer apply.

    Speaking of rewards, look what happens when CEOs and the like screw everything up. No matter how horrible a job they do, they are always paid vast sums of money. Their performance has nothing to do with their payout.

    Look at Mozilo [wikipedia.org], the CEO of Countrywide Financial. Time magazine him one of the "25 People to Blame for the Financial Crisis". He made hundred of millions of dollars. He settled all civil and criminal charges against him for $67.5 million, with Countrywide picking up $20 million. When Countrywide was at it's height, he made loans to all sorts of insiders at Fanny Mae and and Congress members and their families under a program called the "Friends of Angelo (FOA)" VIP program. It's all been swept under the rug.

    Another example is that unlocking a smart phone under contract is a federal level felony, like interstate drug dealing or kidnapping. Even though the Obama administration said they would try and change the law, the Trans Pacific Partnership treaty has a provision making this permanent. Since it's an international treaty, there would be no way to overturn this other then renegotiating the treaty will all the other countries. The phone company cartel has their dirty hands all over this. The various carriers only compete on one thing: who gets to take more out of you wallet while delivering the minimal service they can get away with.

    No real competition in the US. Move along, nothing to see...

  • by Dcnjoe60 (682885) on Tuesday December 17, 2013 @07:28AM (#45712677)

    Whether they should have been bailed out, people can argue until hell freezes over. However, since they were bailed out, it was totally up to the government when they sold their stock. They set an arbitrary date to divest themselves of the GM stock by the end of the year. They could have held the stock longer until it recovered their cost. As such, the loss is becuase of the government's action, not GM's.

    Maybe they (the government) should have purchased bonds, but they didn't. They (the government) made a decision to purchase stock and they made a decision to sell it below what they paid. Why should GM be faulted for that?

  • not news for nerds (Score:4, Interesting)

    by nimbius (983462) on Tuesday December 17, 2013 @07:40AM (#45712727) Homepage
    arguably not even stuff that matters. Most major banks fought repaying debts to the government under TARP, but lost. There is no reason to think GM would be so bold as to think they could get away with it. The real story, if any to be attributed, is that GM thinks raising a stink about this isnt likely to affect their public image or piss off the cloistered elite.

    Lemon socialism, the willful and intentional bailout of free market capitalist corporations at the expense of regular citizens, is something for which most americans have a seething distate but thats largely been ignored by the plutocracy. when it cant be shrouded from limelight, the rich funnel cash to the rich to convince the everyman that somehow poor people are a larger financial and social demon than the plethora of warbucks and moneysworths that strongarmed our leadership into writing off their willfull ignorance and criminal disregard for society outside their inculcated elite. GM does great disservice to this veil by hauling from the grave these hastily rested memories.

    when GM dog-eared its pockets in front of congress they were so displaced from how americans lived it took them two tries to get their sad-face and beggary right. they frustratedly plodded off their leer-jets and said goodbye to their inflight perignon as americans collectively cried WTF. They foresook their ferarris and told the driver instead to pilot an american SUV to the whitehouse in lieu of the Rolls Ghost to which all were accustomed. this to them was the equivalent of donning a shoeshine boys flatcap for an afternoon as they arrived still clad in a regality most americans would struggle to even approach. 'pay up of they all starve' they said, and pay up the government did. Through TARP and cash for clunkers and rebates innumerable the united states automotive industry received the largest bailout in history and for its efforts was rewarded with another eight years to kick its heels onto its mahogany desk while real innovators like Tesla were demonized at their behest for loans they legitimately worked to earn. Outflanked by foreign competetors, again, GM brokered deals with Nissan and Toyota to secure token technologies that customers wanted like hybrid or all electric systems but were rebuffed by a market that largely found an affordable and reliable solution elsewhere. They secured a token few volt owners; the battery powered equivalent of a diesel train. They buried the Aspine hybrid, the very same vehicle which executives traveled to congress, and instead invested in platforms designed in europe and brazil for the small efficient reliable vehicles they were incapable of producing domestically.

    so for GM to suggest they shouldnt pay back a part of a loan, while no different than any other industry, should be remembered as the day when the pot-bellied cousin of the elite dared to bring up its uncles marriage counseling.
  • by gravis777 (123605) on Tuesday December 17, 2013 @07:47AM (#45712751)

    GM had met the terms required of it from the bailout - some of which was paying back in cash, and some of which was paying in stock. The government decided to sell the stock at a loss. That's not GM's fault.

    Here is my question - what happened to GM stock when that many shares suddenly flooded the market? Wouldn't that make stock prices go DOWN? Ironically, though, the stock price went up considerably as investors are happy the government no longer holds a part of GM.

    In any case, whether GM benefited from this or not, the point is that 1)GM fulfilled its obligation and 2) the government sold stock at a loss. Maybe this lesson will force the government to make better financial decisions. Okay, probably not, but one could hope

  • The TAXPAYERS took that risk, and we took it involuntarily.

    GM should have been liquidated.

    -jcr

    • by Stumbles (602007)
      Disagree about GM being liquidated. Instead of Obama acting outside the scope of his authority (unconstitutionally), GM should have been allowed to enter into the normal bankruptcy process as thousands of other businesses have done over the past. Only after the various bankruptcy phases were completed and it became clear no resolution could fix their problem; then they should have been liquidated. Punishing GM by immediate liquidation because of Obama's irresponsibility is irresponsible.
  • The government could have sold then and turned a profit (or at least a capital gain).

    They chose to wait and sell after the share price had gone back down again, and to not wait and see if it went back up in the future.

    GM had no control over those actions.

    I'm sure many others who bought at the IPO have sold their shares at various times since then, and taken the then-going price.

    If they did so at a loss, GM doesn't owe them anything, and if they did so at a profit, they don't owe GM anything.

  • by ai4px (1244212) on Tuesday December 17, 2013 @08:17AM (#45712899)
    He's technically right. It was stupid of the government to save GM the way they did. This too big to fail mentality has got to stop. If GM had failed, someone would have bought up the pieces and they would have gone forward under a new name. Shame on the government for saving them. At this point, "we" should heed the addage "fool me once, shame on you, fool me twice, shame on me".
  • Sales of the Chevy Volt don't look too shabby. http://www.greencarreports.com/news/1088113_plug-in-electric-car-sales-for-oct-volt-leaf-hold-steady [greencarreports.com] This is a move that carried quite a lot R&D investment and promises to get a battery industry going in the US. Intervention also seems to have brought about movement on CAFE standards. Possibly, we are getting a good deal on this.
  • Ford was in some measure of financial strife when it decided not to take Bailout Bucks like Chrysler and General Motors. Though admittedly a small sampling, a number of my acquaintances who'd been dyed-in-the-wool Chevy Men (some since their father's grandfather's generation) were driving new F-series trucks shortly thereafter. Perhaps GM could have redeemed themselves somewhat with a "Cinderella Man"-style payback of the welfare it received, even though and especially since they didn't have to.
  • by Bill_the_Engineer (772575) on Tuesday December 17, 2013 @10:03AM (#45713929)
    I reject the notion of purchasing a shitty GM vehicle.
  • by ElitistWhiner (79961) on Tuesday December 17, 2013 @10:12AM (#45714049) Journal

    Refuse to honor your debt to society who bailed your assets out of imminent bankruptcy.

    Capitalism failed. Repeat. No lessons were learned. The U.S. economy post-captialism is run by failures.

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