Should GM Repay $10,000,000,000 In Bailout Money? CEO Says No

"PRBot II" (prbot2)
12/17/2013 at 15:19 • Filed to: news dump, gm

He says the government took a risk like any other investor.

Reposted from " !!!error: Indecipherable SUB-paragraph formatting!!! "

WASHINGTON — The General Motors bailout may have cost the government $10 billion, but 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.

"I would not accept the premise that this was a bad deal," Akerson said during a question-and-answer session at the National Press Club in Washington. He also said the government's $49.5-billion aid to GM helped save billions of dollars in tax revenue and government social services.

Akerson spoke in the wake of Treasury announcement last week that it sold its last shares in GM and Akerson's decision to retire in January. The automaker's board of directors named Mary Barra, the company's first CEO, to succeed Akerson.

The speech also came as GM announced it is investing $1.2-billion in five U.S. plants, which Akerson said is a recognition that after 15 straight profitable quarters the automaker can't rest on its success.

"We are in a capital-intensive business that demands steady and significant investment," Akerson said, as he discussed many of the changes that had to be made to the automaker's corporate structure after exiting a "quick rinse" bankruptcy in 2009.

Akerson said it fell to him and his team to restore GM's good name, transform operations and "put quality and the customer back at the center" of the company's decision-making, a process he called "the biggest cultural change we've been able to infuse into the new GM."

He said GM's bloated and overly complex operations have been streamlined, products are better and, with the government's help, a crushing debt was reduced.

"We've been trying to fix this airplane while in the air," he said.

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 — though one he clearly supported — to take an ownership stake in the form of company shares.

Asked whether GM should pay the difference between the amount the government provided the company and the return from the sale of the shares, Akerson said the "die was cast" by Treasury when it decided to take shares. For GM to make up for any shortfall could result in lawsuits from other shareholders. Those investors expect the company to resume paying a dividend for the first time since it exited bankruptcy in July 2009.

He also defended the deal as one that saved millions of jobs, saying "net-net, it was a positive for the U.S. economy."

Now, it will be up to Barra to continue GM's success. Monday's news that the automaker is upgrading and expanding facdtories in Flint, Detroit-Hamtramck and Romulus; as well as others in Toledo, Ohio, and Bedford, Ind., was meant to demonstrate that momentum.

"This will bring the four-year total of investments in our U.S. plants to more than $10 billion," Akerson said. He said about 7,500 people already work in those five plants and today's announcements will create or retain more than 1,100 jobs.

DISCUSSION (6)

AMC/Renauledge > PRBot II
12/17/2013 at 15:47

Nope.

The company shafted its old shareholders in the BK. Treating the government-as-shareholder any differently by paying them the difference between their initial buy-in and their stock sale would put GM in line for massive lawsuits.

The US Treasury was more than reimbursed through the income taxes of all those who remained employed from 2009-13 because GM stayed open.

The Transporter > PRBot II
12/17/2013 at 15:55

Back in 2009, I purchased a lot of stock in Frontier Airlines. At the time, Frontier was in bankruptcy and their stock was worth pennies on the dollar. The fact that they were in bankruptcy wasn't exactly their fault. Up to the point that they had to file for bankruptcy, they were actually the only profitable airline in the US. Not even Southwest could say that.

In April of 2008, the bank that processed Frontier's credit card transactions decided one day to keep all of the money from the transactions instead of just passing it on to Frontier like they normally did. Apparently, that's something that banks can do. This plunged a profitable airline immediately into bankruptcy.

Because it was an OTC Pink Slip stock of a company that was still in Chapter 11 reorganization, I knew that there was a risk that I could loose every last dime that I put in, but because I wasn't really investing that much (only a few hundred dollars) and because there was a possibility that if things went my way I could end up with 10 to 100 times as much money.

When Frontier finally did come out of bankruptcy, it was announced that Republic Airlines would purchase the airline under the condition that the currently existing public stock be devalued. So I lost all the money that I put in. It was a risk, and I knew it was a risk. While I wasn't pleased about the outcome, I didn't bitch about it afterwards.

That's what can happen when you play with the stock market. It doesn't matter who you are.

King Ginger, not writing for Business Insider > PRBot II
12/17/2013 at 16:31

Stocks and investments are a dangerous game.

DatASSun > The Transporter
12/17/2013 at 16:48

so let me get this straight the Banks just robbed the company going bankrupt ? forcing them to go bankrupt ?

We need to start a bank guys like asap .

Philbert/Phartnagle > PRBot II
12/17/2013 at 17:26

Yes they should.

They can start by giving the taxpayers they ripped off new Corvettes as compensation.

The Transporter > DatASSun
12/17/2013 at 18:20

That is exactly what happened. Apparently, there's some boilerplate clause in most credit card transaction contracts that says that if the bank decides to keep the money, it can. Now, if they did this all the time indiscriminately, their name would become mud very quickly, but it's kept in there as a way to ensure that no matter what, the bank will survive and to hell with everyone else, even if they're loyal customers. I mean, what are they going to do? Not use a bank?