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GM's CEO Rejects Repaying Feds for Bailout Losses

Unknown Lamer posted about 4 months ago | from the loan-guarantees-bad-blank-checks-good dept.

The Almighty Buck 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."

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356 comments

Wrong use of money these days (5, Insightful)

MrDoh! (71235) | about 4 months ago | (#45712249)

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 (5, Insightful)

duckintheface (710137) | about 4 months ago | (#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 (5, Insightful)

FriendlyLurker (50431) | about 4 months ago | (#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.

Re:real socialism (-1)

Anonymous Coward | about 4 months ago | (#45712507)

That is there final goal to have socialism, as meant by Karl Marx

Re:real socialism (-1, Troll)

Anonymous Coward | about 4 months ago | (#45712597)

liberals like me want to redistribute a little wealth.

Lets call it what it is. Liberals like you want to steal money from those who work and give it to those who don't and call it charity. Its not charity its theft, pure and simple. That's why they call you names because you are a thief.

Charity is given willingly, not at the point of a gun. Taking money at the point of a gun (the IRS) is robbery. Me choosing to give money to a homeless guy is charity. You forcing me to give money to someone else is theft.

Redefine words all you want, you are still a thief.

Re:real socialism (3, Insightful)

inode_buddha (576844) | about 4 months ago | (#45712661)

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.

Re:real socialism (1)

Anonymous Coward | about 4 months ago | (#45712607)

I think you need to look up your terms. Redistribution of wealth is socialism. State ownership of production is called communism. Just saying.

Re:real socialism (0)

Anonymous Coward | about 4 months ago | (#45712743)

(State) ownership of property is communism; wherer just of the means of production in socialism.

Re:real socialism (-1, Flamebait)

flyneye (84093) | about 4 months ago | (#45712631)

But Marx was a scumbag convict, Communism is clearly a FAIL at any level, the state couldn't find it's ass with both hands, a light and a road map. The present governments assumption of shares only reflects the kickbacks and corruption, more scumbags, more FAIL and more corporations OWNing their own piece of government.

If to avoid revolt, one must regulate these companies, break them into itty bitty microcompanies and sell them off to the people. The end. Amen. Fine'

Re:real socialism (1)

cheesybagel (670288) | about 4 months ago | (#45712735)

The government of China works pretty well. So did the governments of Soviet Russia during the so called war communism period. Economically at least.

State control of the economy and planned economics did not begin with communism, despite what Marx would have liked to think, since Palace economies in the distant past worked pretty much that way. The problems are always the same. Lack of innovation and lack of drive to push efficiency further. But in a place where the individuals actors themselves cannot act to produce infrastructure, a state controlled apparatus with centralized power can do things individuals cannot. This is why it worked so well for electrification in the Soviet Union and other things like that but failed miserably at coming with new technology like biotech or computers.

Re:real socialism (1)

Charliemopps (1157495) | about 4 months ago | (#45712665)

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.

Re:real socialism (1)

cheesybagel (670288) | about 4 months ago | (#45712741)

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.

Re:Wrong use of money these days (2, Interesting)

Joce640k (829181) | about 4 months ago | (#45712329)

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.

Re:Wrong use of money these days (5, Insightful)

Sockatume (732728) | about 4 months ago | (#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.

Re:Wrong use of money these days (1)

Vanderhoth (1582661) | about 4 months ago | (#45712451)

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?

Re:Wrong use of money these days (2)

Sockatume (732728) | about 4 months ago | (#45712459)

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.

Re:Wrong use of money these days (1)

Anonymous Coward | about 4 months ago | (#45712489)

To me that sounds like a problem created by the government. Either keep your shares and potentially sell them later for a higher price and have some control in the company, or sell at a loss.

Re:Wrong use of money these days (1)

Sockatume (732728) | about 4 months ago | (#45712533)

Yes, I would love to hear the economic rationale for selling when they did.

Re:Wrong use of money these days (1, Insightful)

unitron (5733) | about 4 months ago | (#45712553)

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 (0)

Entrope (68843) | about 4 months ago | (#45712589)

Most of those people complained because the government doesn't know how to run a manufacturing business, and was bound to lose money in the process. Dear Leader kept insisting otherwise, although he got a little quieter after Solyndra and its ilk exposed government's general incompetence at distinguishing sustainable businesses from losers.

Re: Wrong use of money these days (2)

Sockatume (732728) | about 4 months ago | (#45712623)

Run? Whatever losses GM made during that period would seem to be the GM leadership's own responsibility. They nearly went bankrupt in the first place after all.

Re: Wrong use of money these days (3)

Entrope (68843) | about 4 months ago | (#45712659)

That GM lost money is their responsibility. That the dollars came from taxpayers, and the loss is now effectively part of the national debt, is the government's fault.

Re: Wrong use of money these days (0)

Sique (173459) | about 4 months ago | (#45712669)

The government competence at distinguishing sustainable businesses from losers is about the same than the competence of every other investor. Businesses fail. All the time. And the investors in the failed businesses lose. (And the workers waiting for outstanding pay lose. And the suppliers lose. And the town the business is incorporated in loses.) The average business founder is according to your definition incompetent, as most businesses fail within a few years. The average investor is incompetent, as most businesses he invests in, cost him money.

But only if the government is involved, it is all the fault of of the government, right?

Re: Wrong use of money these days (2)

Entrope (68843) | about 4 months ago | (#45712709)

Government is no better than other investors, and often worse. Take Solyndra as an example: private investors basically gave up on it until corruptocrats at DoE decided to funnel cash down that toilet. There's also a conflict of interest when government has a big stock position in certain companies. Given that the US has traditionally not made that kind of investment in private companies, I certainly do hold the government responsible for losing taxpayer dollars there. Do you think private investors are, or should be, off the hook when they make money-losing investments?

Re:Wrong use of money these days (1)

Flammon (4726) | about 4 months ago | (#45712635)

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.

Re:Wrong use of money these days (1)

Sockatume (732728) | about 4 months ago | (#45712731)

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.

Re:Wrong use of money these days (1)

cheesybagel (670288) | about 4 months ago | (#45712753)

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.

Re:Wrong use of money these days (1)

spikesahead (111032) | about 4 months ago | (#45712431)

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 considerations. If there is a choice to be made, his job is literally to make the choice that keeps the company as strong as possible. If he takes other concepts into consideration, such as 'the greater good' or 'common human decency or dignity' or even 'keep us from going extinct in a thousand years' he is quite literally not doing the job he's payed so very very much money to do. That's what could get him fired!

I personally share the same perspective of you, I think this is a dick move by a dick of a person in service to a dick corporation and it saddens me that there's no good way to make it more profitable to be ethical and responsible than it is to make every shady 'fuck you' deal you can. I think the only effective, non-violent solution to this will probably be the erosion of privacy for the upper classes, think universal ubiquitous paparazzi letting anyone who wanted to watch them 24 hours a day, even when they sleep, to make sure nobody's whispering shady evil deals into their profit hungry ears. It's only fair, the upper classes literally have the capacity to do that to any of us already, things will begin to change when we can do it back. The evil ones will wither under the glare of public attention while those honorable and respectable will be proven so and rewarded. I can't see any other positive future.

Re:Wrong use of money these days (5, Insightful)

confused one (671304) | about 4 months ago | (#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.

Re:Wrong use of money these days (0)

Joce640k (829181) | about 4 months ago | (#45712511)

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.

a) Those 'other shareholders' bought the shares voluntarily. The taxpayer didn't.

b) Those 'other shareholders' should probably be grateful that their shares aren't valued at $0 right now. Thanks to the taxpayer.

It's sad that the law can't ever make an exception to do the decent thing without exposing itself to a bunch of assholes who're just trying to game the system.

Re:Wrong use of money these days (2)

mehtars (655511) | about 4 months ago | (#45712571)

The treasury sold it voluntarily. The treasury could have waited until the price was non-loss making.

Re: Wrong use of money these days (0)

Entrope (68843) | about 4 months ago | (#45712601)

If you're so confident about the future price of GM stock, why don't you buy the stock, give the US enough cash to offset its losses, and sell the stock when you'll break even or make a profit?

Re: Wrong use of money these days (2)

mehtars (655511) | about 4 months ago | (#45712697)

My argument is the treasury didn't have to sell and take a loss. They could have left the stock on its balance sheet as stock.

The whole point of the bailout was to prevent a systemic collapse of the US economy. A GM failure would have probably caused losses upwards of 105 billion dollars of lost tax revenue (http://money.cnn.com/2013/12/09/news/companies/gm-bailout-stock-sale/), which is paltry in context of the direct loss of 10 Billion.

The treasury would have had to sold it at 53 USD to break even on the stock. Today's price is around 41 USD. I don't think it would be unusual to see a move closer to 53, as long there is no major calamity in the general economy or through the performance of GM.

Re: Wrong use of money these days (1)

Entrope (68843) | about 4 months ago | (#45712725)

That you believe those numbers is your fault. For example, when was the last time GM stock traded above $45? Why do you think one of today's shares will ever be worth more than $50?

Re:Wrong use of money these days (2)

emj (15659) | about 4 months ago | (#45712715)

Some perspective when Sweden bailed out the banks in 1994 the government waited a long time to sell. It was a very good investment.

Re:Wrong use of money these days (5, Insightful)

Stolpskott (2422670) | about 4 months ago | (#45712627)

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:Wrong use of money these days (1)

unitron (5733) | about 4 months ago | (#45712603)

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, the shares issued after the bankruptcy.

The federal government brought the loss on themselves by first buying some of those shares and then holding them until they went down in value and then selling at a loss instead of continuing to hold them in the hope that they would go back up again.

Those shares have done what stock sometimes does, declined in value relative to the IPO price.

In the future they may go down even further or they may go up again.

That's the risk of capitalism.

Re:Wrong use of money these days (1)

GNious (953874) | about 4 months ago | (#45712653)

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"...?

Rent Seeking Revolution (-1)

ObsessiveMathsFreak (773371) | about 4 months ago | (#45712439)

Ladies and Gentlemen; Our civilisation has given rise to many world altering revolutions. From the agricultural revolution, to the industrial revolutions, to the digital revolution, our society, economy and culture have undergone massive change and improvement.

But now we stand on the cusp of a new revolution, greater than all that has ever come before. Ladies and Gentlemen we have entered the age of the Rent Seeking Revolution.

No longer will enterprise be constrained by land, labour, or capital or competition. All that enterprise requires now is connections. With the right connections to the state, its resources, and its law making process, entrepreneurs can seek Rent with impunity. Legal Monopolies, favoured taxation rates, grants, credits, tariffs, with enough leverage even a direct tap on demand into the public treasury.

The Future is Rent. In finance, insurance, real estate, and now even heavy industries; No longer will toil or responsibility be prerequisites for success. Now, with the right connections, enterprises can have the State channel funds, taxes, and tolls directly to favoured private companies. The Wealth of entire nations channelled to the bold few who move first in these new times.

Rent is Law. Law is Rent. It is pointless to resist this new human revolution. Democratic, Socialist, and Industrial Luddities cannot stand against the swelling tide of Rentiers waiting to inveigle themselves whole new businesses out of nothing but state backed favour. You can either party all night in this brave new world, or be left outside paying the bill. The risk is yours to take!

Re:Wrong use of money these days (1)

flyneye (84093) | about 4 months ago | (#45712595)

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 and where you live and when your wife fucks the mailman.

Good old fashioned lending...

Pay up (0, Informative)

Anonymous Coward | about 4 months ago | (#45712251)

Pay up you fucking bum!

Re:Pay up (0)

Anonymous Coward | about 4 months ago | (#45712427)

Why should he? This wasn't a loan. They took stock just like any poor shlub who tried to make a buck on GM stock.
They all tried their hand at the big slot machine. Equally. Just the fed used everyone elses money and not their own paychecks like any other investor.

Why should the feds get a pass to have their losses covered? Wheres the coverage for the average guy who lost money at the exact same time the feds did?

Would the feds have given back any money if they had come out ahead? Fuck no! So why should it work the other way around?

Oh just because it was the 'publics' money that got lost? Well fuck. Did the public tell the feds to do this? Nope. Would the public have come out ahead if they'd scored big? Nope.

Fuck the feds. Their agreement was stupid. They lost. Suck it up. Just like anyone else who gambled and LOST.

Now. The real question is. DID ANYONE LEARN ANYTHING HERE!
Seems like GM did. Did anyone else? Any education about gambling sink in at all?
Maybe learned a bit about making better agreements when it comes to 'bailouts'?
Will the public wise up that letting other people gamble with YOUR money is fucking stupid and not do it again?

That's the real travesty of justice here. The only ones who really lost was joe taxpayer. Because some paper pushers decided to gamble using other peoples money. YOUR MONEY! And you are pissed at GM? Fuck they didn't gamble your money. They did exactly as they always do. And follow the american corporate motto. Profit above all else.

Why are you pissed at GM? The feds are the ones who took your money and pissed it away...
Are you ever going to let them do that again? Can you stop them?

Re:Pay up (1)

Joce640k (829181) | about 4 months ago | (#45712529)

Why should he? This wasn't a loan. They took stock just like any poor shlub who tried to make a buck on GM stock.

Who's "they"?

Did "they" buy shares voluntarily or were they forced to buy them by a government who was trying to save people's jobs?

risk? with a printing press? (2, Interesting)

turkeydance (1266624) | about 4 months ago | (#45712255)

now if it had been Bitcoins.......

Re:risk? with a printing press? (0)

Anonymous Coward | about 4 months ago | (#45712705)

printing press, bitcoins?
This is not about money it is about stocks.

Risk, with stocks? yeah.

Not agreed upon? (0)

Anonymous Coward | about 4 months ago | (#45712257)

AFAIK there wasn't any sort of agreement for GM to pay back what the treasury spent on the bailout (which to me is kind of a huge oversight), so I guess the state is SOL on this unless GM is overcome by the christmas spirit and shows some sort of corporate good will.

Re:Not agreed upon? (1)

Joce640k (829181) | about 4 months ago | (#45712321)

Yep. There's no *legal* requirement for him to pay back the money he took from the people that are keeping him in a life of luxury, so why should he? It's not as if his management was in any way linked to the shitty cars that weren't selling enough to keep the company going. Nope. Not a bit.

How is this news for nerds ? (0, Offtopic)

Nadir (805) | about 4 months ago | (#45712263)

As per $SUBJECT. If Slashdot wants to run these stories they should be hidden by default.

Re:How is this news for nerds ? (1, Insightful)

Anonymous Coward | about 4 months ago | (#45712287)

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.

Re:How is this news for nerds ? (0)

Anonymous Coward | about 4 months ago | (#45712325)

Haven't you heard? Most nerds now work in financial companies. It is the only place where actual engineering is going on these days.

Re:How is this news for nerds ? (1)

rvw (755107) | about 4 months ago | (#45712343)

As per $SUBJECT. If Slashdot wants to run these stories they should be hidden by default.

It's another one of those car analogies!

Re:How is this news for nerds ? (0)

Anonymous Coward | about 4 months ago | (#45712417)

Hidden. I disagree. Boiled in oil I'm sure. I came here for news and got this $hit.

Re:How is this news for nerds ? (1)

confused one (671304) | about 4 months ago | (#45712445)

perhaps because business and government dollars pay for our nerdiness... without the dollars, we would all be toiling in the fields with everyone else.

Risk pool payment, not payback. (5, Interesting)

patrixmyth (167599) | about 4 months ago | (#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.

Re:Risk pool payment, not payback. (0)

esldude (1157749) | about 4 months ago | (#45712303)

Hey, they are like our precious welfare moms. Well sure, it would ethical to pay things back. But what value is ethics? I mean really. Why should they pay back money that kept them from going like.....all bankrupt and stuff? Who would value that? Don't be ridiculous. So what does that leave us? Ethically no one with half a brain would buy from them. Which means they fail, go bankrupt and cease to exist. At great loss in jobs and capital. Or we buy from them, enrich those assholes who don't deserve it, and keep lots of people employed. And those execs who have like all the wrong ideas, that get reinforced, .....hey it is the cost of doing business and being a free market economy. What's not to love? A jewish banker would surely be most comfortable with this as would any bought and paid for politician. Hey we all got our own little problems to solve. Why not? Yeah well F12k you!!!!!!!!!!

Re:Risk pool payment, not payback. (1)

howardd21 (1001567) | about 4 months ago | (#45712333)

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.

Re:Risk pool payment, not payback. (1)

PolygamousRanchKid (1290638) | about 4 months ago | (#45712541)

(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 that GM knows that it can fail again, and will be bailed out by the US government, again.

So, to solve problem 2) . . . GM has to shrink. How can the US government help achieve this . . . ? Well, how about the government buying from someone else, when they are looking for new cars . . . ?

Re: Risk pool payment, not payback. (1)

Entrope (68843) | about 4 months ago | (#45712621)

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.

Re:Risk pool payment, not payback. (4, Insightful)

gl4ss (559668) | about 4 months ago | (#45712479)

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:Risk pool payment, not payback. (3, Interesting)

unitron (5733) | about 4 months ago | (#45712645)

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.

Re:Risk pool payment, not payback. (1)

swb (14022) | about 4 months ago | (#45712609)

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 policy).

Maybe this is largely accomplished by the reinsurance industry, at least on a macroeconomic level.

Re:Risk pool payment, not payback. (1)

Charliemopps (1157495) | about 4 months ago | (#45712685)

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.

Re:Risk pool payment, not payback. (0)

Anonymous Coward | about 4 months ago | (#45712749)

Dumb idea, because then investors can't assess the real risk of a company failing. They will just always assume there's a bailout coming, and now the price risk of a bubble is discounted. Didn't we learn anything from the 2008 housing bubble?

Government distorts markets, and now you want to institutionalize that practice in perpetuity. This is crony corporatism at it's worst, something the Obama administration knows all to well how to manipulate.

Welcome to the stock market (0)

Anonymous Coward | about 4 months ago | (#45712301)

You'll forgive if I'm too lazy to log in. Before people get up in arms about this: the guy is right. The government did not issue a loan, they bought a large amount of stock. The value of the stock then went down (suprise, dated business model less profitable than expected). That's kind of how the whole capitalism thing works.

The flip side, of course, would be that if the stock went up, the government would be getting more money than they put in. I wonder if they would be equally pissed if that happened... "Guys, you gave us too much money! Stop!"

Re:Welcome to the stock market (3, Informative)

Joce640k (829181) | about 4 months ago | (#45712335)

The government did not issue a loan, they bought a large amount of stock.

a) Would they have purchased that stock if it hadn't been a "bailout"?

b) A "loan" would have left them with nothing if the company had tanked. A stock purchase would entitle them to some company assets to sell off, this is what most people call "security".

Re:Welcome to the stock market (1)

Godwin O'Hitler (205945) | about 4 months ago | (#45712399)

How many cents in the dollar do you think a fire sale in a bust motor factory would raise? I'm assuming there's no way you could sell it as a going concern.
There again it's not my government so who am I to ask.

Re:Welcome to the stock market (2)

Sockatume (732728) | about 4 months ago | (#45712403)

As a loan creditor the government would be entitled to some portion of its liability in any bankrupcy sell-off.

Re:Welcome to the stock market (2)

halexists (2587109) | about 4 months ago | (#45712463)

Whereas as stockholders come behind creditors in bankruptcy proceedings. So if a loan left the with "nothing," stock would have left them with less in such an event.

Re:Welcome to the stock market (4, Informative)

wienerschnizzel (1409447) | about 4 months ago | (#45712457)

You are wrong.

a) As a "bailout", the fed took ownership of the company through stock. How shall GM pay their owners? From what? Shall they take a loan to pay them? From whom? Should they only pay the fed or the other owners as well?

b) If the company had tanked, its assets would be liquidated and payed out to the creditors. Not the owners, you see, because they are the ones who failed. They are left with nothing when the company fails

Re:Welcome to the stock market (1)

Sockatume (732728) | about 4 months ago | (#45712465)

Depends on the shares. I would be surprised if the shares the government was issued with did not explicitly include an entitlement to GM's assets in the case of bankrupcy.

Re:Welcome to the stock market (0)

Anonymous Coward | about 4 months ago | (#45712637)

Can't happen. It's true that in the case of sell off, certain stock owners get money before others, i.e. preferred stock, but creditors are always payed before any stock holder.

Re:Welcome to the stock market (1)

Sockatume (732728) | about 4 months ago | (#45712713)

They're low on the totem pole, but that's not (as the post I was replying to asserted) exactly zero money back.

Re:Welcome to the stock market (3, Insightful)

Ihlosi (895663) | about 4 months ago | (#45712547)

b) A "loan" would have left them with nothing if the company had tanked. A stock purchase would entitle them to some company assets to sell off, this is what most people call "security".

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.

Re:Welcome to the stock market (0)

Anonymous Coward | about 4 months ago | (#45712593)

Wrong. Company assets are sold off to repay loans. Shareholders get whatever is left after all debts have been repayed. That's the law.

Re: Welcome to the stock market (0)

Anonymous Coward | about 4 months ago | (#45712433)

They would have sold the shares at or before they passed the purchase price. Not profiting off the bailout was completely under their control.

The US is doomed. (-1)

Anonymous Coward | about 4 months ago | (#45712319)

Seven comments and it's nothing but but the clueless whining about how, gosh darn it, GM should pay back the money.

This is fucking incomprehensible.

But since we don't give a fuck any more, how about y'all have Obama write me a check to cover my losses on Fannie Mae? I mean, as long as we're giving do-overs for bad investments. What's good for the goose and all that.

You guys are cool with your taxes being used for that, right? Gotta spend money to not lose any of your own money, hey?

drive the solar magnet powered star cars (0)

Anonymous Coward | about 4 months ago | (#45712327)

we're way off the (overdose) scale on combustibles already at any price.

free the innocent stem cells so we can repay ourselves momkind... etc...

Right and wrong (4, Interesting)

Monoman (8745) | about 4 months ago | (#45712339)

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.

Re:Right and wrong (0)

confused one (671304) | about 4 months ago | (#45712485)

He's not morally wrong either. He represents the company and his job is to protect shareholder value. If he agreed to pay back the $10B loss by Treasury, he might open up the company to lawsuits from all the investors that lost money in the bankruptcy process. This would undo all the good done by Treasury making the investment. In addition, while on the face of it Treasury lost $10B, the gains to the economy by supporting the company and its supply chain will likely exceed the loss through additional revenue and taxes. The Bush and Obama administrations made the investment, knowing that it would likely not return 100% of the capital investment when the stocks were sold -- it was a long shot that the stock value would ever be high enough to recover the full $50B. Overall (economy wide) if the result is better than what would have happened should the government have done nothing, then government did it's job by stabilizing the economy.

Now, as to how this affects my personal decision making: I just purchased a new car, and it was a Ford.

its NOT the same (2)

YoungManKlaus (2773165) | about 4 months ago | (#45712351)

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 ...

And added "HA HA SUCKERS" (0)

Anonymous Coward | about 4 months ago | (#45712437)

I wonder if we should just cut out the middleman and pay our taxes straight to the corporate welfare queens from now on.

Unless they were bonds (2, Funny)

msobkow (48369) | about 4 months ago | (#45712469)

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.

Re:Unless they were bonds (1)

Joce640k (829181) | about 4 months ago | (#45712557)

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.

Re:Unless they were bonds (0)

Anonymous Coward | about 4 months ago | (#45712567)

I don't get it why the government sold the stock at a loss, wouldn't it be sensible to keep them until it was profitable to sell them? O.o

Re: Unless they were bonds (1)

Entrope (68843) | about 4 months ago | (#45712679)

Smart money says GM stock (in constant dollars) will never exceed the price that the US paid.

My next truck wont be GM (0)

Anonymous Coward | about 4 months ago | (#45712543)

You vote with your wallet - this ass clown needs some market "adjustment".

Sure, 1 new truck is a drop in the bucket to this company, but Ford didnt take or need any govt money.

My next truck will be ford.

Re:My next truck wont be GM (1)

SecurityGuy (217807) | about 4 months ago | (#45712625)

Ford wouldn't have paid investors for losing money on their stock either. Nor should they. Do you think the government would have given GM the money had they profited? Of course not. Why do you think it should go the other way?

This just in: welfare recipient ungrateful s.o.b. (4, Insightful)

argStyopa (232550) | about 4 months ago | (#45712549)

...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.

This is why the Bailout was bad. (0)

Anonymous Coward | about 4 months ago | (#45712551)

The CEO is right. To treat the Government different than any other equity holder, is to open the door for any stockholder to sue if their equity position takes a loss. It was the government's decision to sell before the stock was at a break even point.

If you don't like the CEO getting a fat paycheck on Federal dollars, oppose any future bailouts. Such contact obligations can be modified in a bankruptcy proceeding. Doing a bailout, just gave money away without any fundamental restructuring.

Treasury isn't a regular shareholder (1)

dutchwhizzman (817898) | about 4 months ago | (#45712565)

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?

Welcome to United State (non)capitalism (3, Interesting)

Required Snark (1702878) | about 4 months ago | (#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...

GM is correct in this case (2)

Dcnjoe60 (682885) | about 4 months ago | (#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?

Ok, then next time ... (0)

Anonymous Coward | about 4 months ago | (#45712689)

You implode.

not news for nerds (3, Interesting)

nimbius (983462) | about 4 months ago | (#45712727)

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.

Why should GM pay for government not waiting.. (0)

Anonymous Coward | about 4 months ago | (#45712745)

Seriously, if they would of just waited to sell the shares instead of selling them the way they did they could of actually made a profit. I firmly believe the government SHOULDN"T of bailed them out. That being said i don't think they should pay because government doesn't sell the investment correctly.

Of course they shouldn't repay (3, Insightful)

gravis777 (123605) | about 4 months ago | (#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

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