GM Repays Loans Early: But How?

This morning we reported “GM Repays Loans Early”, but what we did not look at was – how? We know that General Motors borrowed $5.8 billion from not only the U.S. government but the Canadian government as well. The troubled automaker still had 5 years to go, but managed to pay the loans off much earlier than anticipated.

KickingTires has explained that GM did this by its $16.4 billion escrow account; this was set up while General Motors was in bankruptcy by the Obama administration. These funds were given to the troubled automaker in exchange for shares, which the U.S. government currently owns 61 percent of.

Although GM had this new money, they were not allowed to spend it until they got permission from the Treasury Department. General Motors has been able to do a lot with the funds since, such as pay $2.7 billion to resolve the Delphi bankruptcy problem. As the Detroit automaker still had funds left in the account, they were then required to pay back the loans.

General Motors is still struggling when it comes to profit, with no emergency aid from the U.S. government they can now get on with the job at hand, and that is to sell cars and produce a healthy profit. Not certain how happy taxpayers are with this situation, especially when those at the top still pay themselves a hefty salary?



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