Should GM repay $10B rescue cost? CEO says no

[Teh One Who Knocks]

Todd Spangler, Detroit Free Press


WASHINGTON -- The General Motors bailout may have cost the government $10 billion, but 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.

"I would not accept the premise that this was a bad deal," Akerson said during a question-and-answer session at the National Press Club in Washington. He also said the government's $49.5-billion aid to GM helped save billions of dollars in tax revenue and government social services.

Akerson spoke in the wake of Treasury announcement last week that it sold its last shares in GM and Akerson's decision to retire in January. The automaker's board of directors named Mary Barra, the company's first CEO, to succeed Akerson.

The speech also came as GM announced it is investing $1.2-billion in five U.S. plants, which Akerson said is a recognition that after 15 straight profitable quarters the automaker can't rest on its success.

"We are in a capital-intensive business that demands steady and significant investment," Akerson said, as he discussed many of the changes that had to be made to the automaker's corporate structure after exiting a "quick rinse" bankruptcy in 2009.

Akerson said it fell to him and his team to restore GM's good name, transform operations and "put quality and the customer back at the center" of the company's decision-making, a process he called "the biggest cultural change we've been able to infuse into the new GM."

He said GM's bloated and overly complex operations have been streamlined, products are better and, with the government's help, a crushing debt was reduced.

"We've been trying to fix this airplane while in the air," he said.

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 -- though one he clearly supported -- to take an ownership stake in the form of company shares.

Asked whether GM should pay the difference between the amount the government provided the company and the return from the sale of the shares, Akerson said the "die was cast" by Treasury when it decided to take shares. For GM to make up for any shortfall could result in lawsuits from other shareholders. Those investors expect the company to resume paying a dividend for the first time since it exited bankruptcy in July 2009.

He also defended the deal as one that saved millions of jobs, saying "net-net, it was a positive for the U.S. economy."

Now, it will be up to Barra to continue GM's success. Monday's news that the automaker is upgrading and expanding facdtories in Flint, Detroit-Hamtramck and Romulus; as well as others in Toledo, Ohio, and Bedford, Ind., was meant to demonstrate that momentum.

"This will bring the four-year total of investments in our U.S. plants to more than $10 billion," Akerson said. He said about 7,500 people already work in those five plants and today's announcements will create or retain more than 1,100 jobs.

[FBD]

oh ffs

[PorkChopSandwiches]

He makes a valid point, no other share holders would get a refund, why is the government buying stock, there should have been no bailout, but since there was it should have just been a loan

[FBD]

and who's money was it that kept these assholes in charge there? the taxpayers. this was not some investment, this was cronyism, they could at least pay back what they owe.

[Teh One Who Knocks]

I'm thinking that the stock was a form of collateral in the 'new' GM...and if it wasn't for the taxpayers, GM wouldn't exist anymore. I love how they changed their tune now that everything is different:

GM originally: Please Mr Taxpayer, we need your help to survive! Please, please, please give us money or thousands will lose their jobs!



GM now: You guys were just speculators in the stock market, not our fault you lost money, you should have invested more wisely

[PorkChopSandwiches]

He added that it was the Treasury's decision -- though one he clearly supported -- to take an ownership stake in the form of company shares..

I think they should pay the money back, but to be fair it was the treasuries bad decision that put them in the position of speculator.

As I have said since they started doing bailouts, I was against them ALL from the beginning. Too big to fail is a lie, there will always be someone out there ready to fill a void in the market.

[Acid Trip]

It was the unions and Democrats that begged the Treasury to save GM. Without GM their gravy train was coming to an end.

According to Michael Mandel, Business Week’s chief economist, because of GM’s huge unfunded healthcare and pension benefits for unionized retirees, its current 300,000 employees are supporting the number of retirees appropriate for a company with a workforce of 800,000, almost triple the size. GM’s healthcare benefits to its retirees alone cost the company $103 billion between 1993 and 2007, an average of $7 billion a year. The UAW, fully settling into its sheltered position as a result of a grateful new President, who received overwhelming organizational and financial support, and an even more deferential Congress, has already made it abundantly clear that there will be no union givebacks for the ailing Detroit-based car industry.

UAW President Ron Gettelfinger was quoted in the November 17, 2008 Financial Times as saying that “the focus has to be on the economy as a whole as opposed to a UAW contract.” UAW-represented autoworkers at Chrysler and GM make $75 and $73 per hour respectively. The highest paid hourly worker at Toyota makes $47.60. Most other hourly workers make an average of $25 per hour. There is no justice in forcing other financially-stretched American workers to bailout grossly-overpaid autoworkers.

[FBD]

“the focus has to be on the economy as a whole as opposed to a UAW contract.”

“the focus has to be on a UAW contract as opposed to any sort of addressing of fiscal reality or grossly generous to the point of negligent cronyism levels of salary and benefit for these recipients.”

[Muddy]

Pay it back, even if it takes 50 years!