Tag Archives: Bailout

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Did GM pay off its bailout loans by using other government loans?

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Story from Ed Morrissey at Hot Air.

Moderate Republican Chuck Grassley, who supported Obama’s bailouts, wants to know how GM paid off their debts. He wrote a letter to Treasury Secretary Tim Geithner.

Excerpt:

General Motors (GM) yesterday announced that it repaid its TARP loans. I am concerned, however, that this announcement is not what it seems. In fact, it appears to be nothing more than an elaborate TARP money shuffle.

On Tuesday of this week, Mr. Neil Barofsky, the Special Inspector General for TARP, testified before the Senate Finance Committee. During his testimony Mr. Barofsky addressed GM’s recent debt repayment activity, and stated that the funds GM is using to repay its TARP debt are not coming from GM earnings.

Instead, GM seems to be using TARP funds from an escrow account at Treasury to make the debt repayments. The most recent quarterly report from the Office of the Special Inspector General for TARP says “The source of funds for these quarterly [debt] payments will be other TARP funds currently held in an escrow account.” See, Office of the Special Inspector General for TARP, Quarterly Report to Congress dated April 20, 2010, page 115.

Furthermore, Exhibit 99.1 of the Form 8K filed by GM with the SEC on November 16, 2009, seems to confirm that the source of funds for GM’s debt repayments was a multi-billion dollar escrow account at Treasury—not from earnings.

[…]In reality, it looks like GM merely used one source of TARP funds to repay another. 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. 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.

Ed summarizes:

In other words, this is just a shell game. As Jim Vicevich points out, it’s akin to paying off your Visa credit card with your Mastercard — and then bragging about your financial condition. Taxpayers are still on the hook for GM. Nothing at all has changed.

Instead, we have another good reason for government to refrain from bailing out private companies. It makes them act like government when it comes to transparency about their finances. This claim really does prove that GM now stands for Government Motors.

Michelle Malkin also has a good column here about MORE connections between Democrats and rich Wall Street investment bankers. The Democrats are tightly connected with large corporations and investment banks. As a small government conservative, I find this alarming and unsettling. I believe in separation of government and corporations.

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MUST-READ: Wall Street bankers gave Obama millions in campaign contributions

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Republican House Minority Leader John Boehner reports on Obama’s new bank bailout bill.

Excerpt:

President Obama likes to say we need to clean up Wall Street.  But let’s be clear: He is pushing a job-killing bailout bill for Wall Street that benefits his top financial contributor from the 2008 campaign – a firm that just happens to be under investigation by the SEC for defrauding investors.

Despite the President’s rhetoric, his support for the Democrats’ bailout bills gives big Wall Street banks a permanent, taxpayer-funded safety net by designating them “too big to fail.”

[…]Goldman Sachs, recently charged with defrauding investors, was President Obama’s top Wall Street contributor during the 2008 election cycle, donating nearly $1 million to his campaign.

  • Securities & investment firms in general were the fifth largest contributor to President Obama’s 2008 campaign, donating nearly $15 million.
  • Big banks also donated more than $3 million to Obama during the 2008 election cycle.

And some details about what the new bank bailout does:

  • The Dodd Gives Wall Street a Pre-Existing $50 Billion Bailout Slush Fund. Sen. Dodd’s financial bailout bill would create a $50 billion ‘orderly resolution fund’ ($150 billion in Rep. Barney Frank’s bill) that could be repeatedly replenished from industry assessment.
  • The Dodd Bill Gives Wall Street a Treasury-Backed Credit Line.  The FDIC would be authorized to borrow from Treasury up to the amount of cash left in the ‘resolution fund’ plus 90 percent of the value of the assets of any and all too-big-to-fail firms in its control.
  • The Dodd Bill Provides a Government-Guaranteed to Wall Street Debt.  The FDIC would be authorized to guarantee the debt of any solvent bank, bank holding company, or affiliate in any amount subject only to an aggregate debt limit set by the Treasury Department.
  • The Dodd Bill Institutionalizes Unlimited Wall Street Bailouts.  The FDIC, as the resolution agency for too-big-to-fail firms, would be given wide latitude to use resources to make payments to anyone in any amounts, at their own discretion.

Now let’s hear more about the rich bankers from Goldman Sachs.

Goldman Sachs

This Newsbusters article explains Goldman Sachs’ connections to the White House:

  • White House Chief of Staff Rahm Emanuel used to work for Goldman Sachs.
  • Treasury Secretary Tim Geithner used to work for Goldman Sachs.

And the Washington Examiner reports that:

  • Former White House counsel Greg Craig is now employed by Goldman Sachs.

Wall Street banks like Goldman Sachs are often filled with Democrats.

Fannie Mae and Freddie Mac

And don’t forget that the government-backed companies Fannie Mae and Freddie Mac were run by Democrats, and they were also bailed out by the Democrats.

Excerpt:

Freddie and Fannie used huge lobbying budgets and political contributions to keep regulators off their backs.

A group called the Center for Responsive Politics keeps track of which politicians get Fannie and Freddie political contributions. The top three U.S. senators getting big Fannie and Freddie political bucks were Democrats and No. 2 is Sen. Barack Obama.

Now remember, he’s only been in the Senate four years, but he still managed to grab the No. 2 spot ahead of John Kerry — decades in the Senate — and Chris Dodd, who is chairman of the Senate Banking Committee.

Fannie and Freddie have been creations of the congressional Democrats and the Clinton White House, designed to make mortgages available to more people and, as it turns out, some people who couldn’t afford them.

Fannie and Freddie have also been places for big Washington Democrats to go to work in the semi-private sector and pocket millions. The Clinton administration’s White House Budget Director Franklin Raines ran Fannie and collected $50 million. Jamie Gorelick — Clinton Justice Department official — worked for Fannie and took home $26 million. Big Democrat Jim Johnson, recently on Obama’s VP search committee, has hauled in millions from his Fannie Mae CEO job.

Political contributions and bailouts. Is there a connection?

News

Obamacare cancels development on 60 new hospitals

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Story here from CNS News. (H/T ECM)

Excerpt:

Physician-owned hospitals are advertised as less bureaucratic and more focused on doctor-patient decision making. However, larger corporate hospitals say doctor-owned facilities discriminate in favor of high-income patients and refer business to themselves.

The new health care rules single out such hospitals, making new physician-owned projects ineligible to receive payments for Medicare and Medicaid patients.

Existing doctor-owned hospitals will be grandfathered in to get government funds for patients but must seek permission from the Department of Health and Human Services to expand.

[…]More than 60 doctor-owned hospitals across the country that were in the development stage will be canceled, said Molly Sandvig, executive director of Physician Hospitals of America (PHA).

“That’s a lot of access to communities that will be denied,” Sandvig told CNSNews.com. “The existing hospitals are greatly affected. They can’t grow. They can’t add beds. They can’t add rooms. Basically, it stifles their ability to change and meet market needs. This is really an unfortunate thing as well, because we are talking about some of the best hospitals in the country.”

The thing about communism that you need to understand is that it has to kill small business, so that individual consumers have no choice between producers.

A centralized government is much more capable of controlling the operations of a few large conformist oxen than a massive herd of independent cats. That’s why I think there is a lot of hostility to small business in Obama’s economic policies.  In particular, the health care mandates are designed to destroy small businesses, while the massive bailouts are designed to nationalize large companies. It’s straight out of the communist playbook.