AS we inch closer to a clearer understanding of the products and practices that unleashed the credit crisis of 2008, it’s becoming apparent that those seeking the whole truth are still outnumbered by those aiming to obscure it. This is the case not only on Wall Street but also in Washington.
Truth seekers the nation over, therefore, are indebted to Senator Charles E. Grassley, Republican of Iowa, who in recent days uncovered what he called a government-enabled “TARP money shuffle.” It relates to General Motors, which on April 21 paid the balance of its $6.7 billion loan under the Troubled Asset Relief Program.
G.M. trumpeted its escape from the program as evidence that it had turned the corner in its operations. “G.M. is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse,” boasted Edward E. Whitacre Jr., its chief executive.
G.M. also crowed about its loan repayment in a national television ad and the United States Treasury also marked the moment with a press release: “We are encouraged that G.M. has repaid its debt well ahead of schedule and confident that the company is on a strong path to viability,” said Timothy F. Geithner, the Treasury secretary.
Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan.
This is what you get when you appoint a tax-cheat to be the Treasury Secretary.
Here’s what we need to understand about government bailouts. There should never be any such thing as a government bailout. GM and these other bailed-out companies made bad decisions that put them at a competitive disadvantage with respect to their competitors. The Obama administration bailed out these failing companies with money from other hard-working individuals and successful companies, including small businesses. The Obama administration did this for political gain with its favored special interest groups, e.g. – unionized labor, wall street bankers and GSE executives. Those are the groups that got Obama elected, and he paid them back with “bailouts”. Government has no right to get involved with bailing out their buddies with my money and your money.
I remember when people use to complain about profit margins of 8% in some big corporations when Bush was President. But at least they earned that money by selling things that people needed and freely chose to buy. They did operate on a government-backed expense account. Sometimes I wonder whether all of these problems are caused because we elect spoiled-brat, silver-spoon liberals who spent their entire lives getting into trouble and then begging their parents, (and grandparents, in Obama’s case), for bailout money. Maybe they are just making policy based on their experiences in making irresponsible choices and then being bailed out by their parents?