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Sen Chuck Grassley (R-IO) wrote in a letter to Treasury Secretary Tim Geithner that it was an "elaborate money shuffle" saying GM had taken the money from a Treasury escrow account to repay the TARP bailout monies.
"Treasury has merely exchanged a legal right to repayment for an uncertain hope of sharing in the future growth of GM. ..."A debt-for-equity swap is not a repayment."Avery Fellows at Courthouse News Service writes:
Grassley's concern arose from a quarterly TARP oversight report issued Tuesday, which stated: "The source of funds for these quarterly [debt] payments will be other TARP funds currently held in an escrow account."And the money still hasn't been paid back, moron! Using one credit card to pay another credit card is not repayment of debt; it's a sure path to insolvency and bankruptcy. I'm still owed 6.7 billion dollars and a year from now I'll still be owed 6.7 billion dollars.
In a hearing Tuesday before the Senate Finance Committee, TARP overseer Neil Barofsky confirmed that GM was using Treasury funds to make the loan repayment. He said the government could see a huge loss from bailout funds paid to the auto industry, as the manufacturers' ability to repay depends on car sales.
"The taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government's ability to sell GM stock in the future," Grassley wrote.
In his letter, Grassley asked Geithner why the agency allowed GM to use the escrow funds to repay the loan.
Grassley also asked for the amount of funds remaining in the escrow account that may be released to GM, and when such a release would occur.
Grassley quoted GM Vice Chairman Stephen Girsky, who, when asked in a television interview this week if the company was using government funds to repay government loans, said, "Well listen, that is in effect true, but a year ago nobody thought we'd be able to pay this back."
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