GM's CEO Rejects Repaying Feds for Bailout Losses 356
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."
Wrong use of money these days (Score:5, Insightful)
Re:How is this news for nerds ? (Score:1, Insightful)
Economics and finance are topics which can easily be described as nerdy. Just because it doesn't matter to you doesn't mean it isn't Stuff That Matters to someone else.
real socialism (Score:5, Insightful)
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)
Re:Wrong use of money these days (Score:5, Insightful)
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.
Re:Wrong use of money these days (Score:5, Insightful)
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.
Re:Risk pool payment, not payback. (Score:5, Insightful)
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.
Re:Welcome to the stock market (Score:4, Insightful)
Err ... I think you're confusing things here. When a company tanks, its assets get sold off (or otherwise turned into money) to satisfy the creditors (the people who gave loans) demands. In this process, the stockholders shares go *poof*, mostly.
When a company tanks, the creditors are in a slightly better position than the stockholders. In fact, the creditors might end up being the new owner of the company.
This just in: welfare recipient ungrateful s.o.b. (Score:5, Insightful)
...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.
Re:Wrong use of money these days (Score:2, Insightful)
Yes, I would love to hear the economic rationale for selling when they did.
To shut up all the people whining about the government being in the car business?
Re:Wrong use of money these days (Score:5, Insightful)
a) Those 'other shareholders' bought the shares voluntarily. The taxpayer didn't.
Very true, but "the taxpayer" did not choose to invest in GM in the first place, the US Government did. Equally, "the taxpayer" did not choose to sell their shares in GM, at a lower price than those shares were bought for (thus generating the losses), the US Government did.
The US Government had a very compelling reason for buying those shares and shoring up the GM corporate entity and its supply chain. However, there was no contractual obligation for them to sell the shares when they did - as far as I can tell, that decision to sell was made for purely political/PR decisions. Admittedly, those reasons are also compelling - if the US Government introduces and legislation that will have some kind of positive impact for car manufacturers, then there is a conflict-of-interest issue to be addressed, so it is in the Government's interest to avoid holding the shares for an extended period.
However, the Government decided to sell when it did, and the Government is (or should be) responsible for the losses incurred through that decision. After all, if the transaction had yielded a massive profit, the Government would not have been willing to hand that profit over, either back to GM for further investment or to some other organisation that could use it. That profit would go to the treasury to be used.
The company whose shares are being bought and sold has no control over that process, as the shares are freely tradeable on the open market. So without any leverage of control, the company cannot assume the liability for losses. Want to complain about it? Welcome to capitalism. Complaints can be addressed to our Complaints Manager, Helen Waite. Her office is in the basement. Form a queue outside the door, and when someone asks what you are doing, tell them that you were told to go to Helen Waite.
Re:real socialism (Score:3, Insightful)
If charity worked we wouldn't need taxes. As it actually is, people are incredibly selfish antisocial bastards. Also, most of those who do not work, wish that they could get it. Just a few facts for you to ponder - as opposed to what the "media" would have you think.
Of course they shouldn't repay (Score:4, Insightful)
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
Re:real socialism (Score:5, Insightful)
The government of China works pretty well. So did the governments of Soviet Russia during the so called war communism period. Economically at least.
Yeah...I don't think so. If you think it was economically sound, then all you need to do is find people who lived during the period, and ask them about the lack of *everything* from basic necessities, to food. Hell, I can even give a small story from a ex-professor of mine(teaches criminal law and drug laws here in Canada). Back in the 80's they had a group of 10 soviet police officers come over as part of a training program. Their firm belief was everything was staged, from people driving cars, to full shelves in every store, to people walking around and not being subject to search, arrest, and documentation checks. They believed, that the government had created giant potyomkin villages(ottawa, and toronto), just to impress them.
Re:real socialism (Score:4, Insightful)
Most of us, unlike Karl Marx, do not believe you need to own something to control it - the evidence is that it is quite possible to alter the volume on someone else's stereo, or drive a stolen car. The man was an idiot.
Scumbags like you think that the object of life is to be "greedier than thou".
Re: Wrong use of money these days (Score:4, Insightful)
But only if the government is involved, it is all the fault of of the government, right?
When the government uses force to take money from ordinary people "invests" it for them, losing $10 billion on the deal, then yes. It's their fault.
If the people whose jobs/future that were saved by that "investment" now have an excess of $28 billion in cash, they should give it back to the people who were forced to help them (with threats of jail, etc. if they didn't).
Re:real socialism (Score:1, Insightful)
5. Social darwinist: douchebag. ......
6: Liberals: douchebags
7: Conservatives: Douchebags
8: Libertarians: douchebags
These are they who believe that every man is an island unto himself. It usually works, until they need help all of a sudden for some reason.
These "captains of industry" are among the most antisocial douchebags you'll ever encounter, and why should all the rest of our society suffer for their folly? Hence the bailout.
BTW what about the disabled, are they douchebags for not working?
Re:real socialism (Score:2, Insightful)
Re:real socialism (Score:5, Insightful)
We're not captains of industry, we're captains of freedom. And the disabled are not douchebags, they disabled. That's where charity comes in to play.
Statists are the biggest captains of industry, they're the enablers, the socialist drug pushers, and the violent thugs. Since you like using names for people.
Libertarians and anarchists are on a far better plane than people like you. We value morals and ethics over utilitarianism which is all too easy to misuse by tyrants.